MATHEMATICS

ROUND C $5

1) Homework #3B (FV and PV of annuity non-annually)

You plan to buy a house in 10 years. You want to save money for a down payment on the new house. You are able to place $113 every month at the end of the month into a savings account at an annual rate of 7.73 percent, compounded monthly. How much money will be in the account after you made the last payment?

Round the answer to two decimal places.

2) Homework #3C (How much will each annual payment be (Using FV or PV))

You need to accumulate $113,691 for your son’s education. You have decided to place equal year-end deposits in a savings account for the next 12 years. The savings account pays 6.49 percent per year, compounded annually.  How much will each annual payment be?

Round the answer to two decimal places.

Your Answer:

3) Homework #3E (Perpetuity, EAR, RRR)

You are considering an investment that has a nominal annual interest rate of 13.67 percent, compounded semiannually. Therefore, the effective annual rate, or EAR (annual percentage yield) is _____.

Round the answer to two decimal places in percentage form. (Write the percentage sign in the “units” box)

Your Answer:

4) Homework #4A (Bond Current Yield)

You paid $1,0 for a corporate bond that has a 7.3 percent coupon rate. What is the bond’s CURRENT YIELD?

Ound the answer to to decimal places in percentage form

Your answer

5) Homework #4C (Value of the Bond Semi-Annually)

Flower Valley Company bonds have a 9.43 percent coupon rate. Interest is paid semiannually. The bonds have a par value of $1,000 and will mature 16 years from now. Compute the value of Flower Valley Company bonds if investors’ required rate of return is 11.87 percent.

Round the answer to two decimal places.

Your Answer:

6) Homework #4D (YTM annually, semi-annually)

Fresh Fruit, Inc. has a $1,000 par value bond that is currently selling for $1,109. It has an annual coupon rate of 13.12 percent, paid semiannually, and has 9-years remaining until maturity. What would the annual yield to maturity be on the bond if you purchased the bond today and held it until maturity?

Round the answer to two decimal places in percentage form. (Write the percentage sign in the “units” box)

You should use Excel or financial calculator.

Your Answer:

7) Homework #4E (zero-coupon bond)

2 years ago, Mini Max Inc. issued 30 year to maturity zero-coupon bonds with a par value of $1,000. Now the bond has a yield to maturity of 9.12 percent, compounded semi-annually. What is the current price of the bond?

Round the answer to two decimal places.

Your Answer:

8) Homework #4F (Bond Yield to Call. YTM and Price after original Issue)

Bright Sun, Inc. sold an issue of 30-year $1,000 par value bonds to the public. The bonds had a 9.85 percent coupon rate and paid interest annually. It is now 19 years later. The current market rate of interest on the Bright Sun bonds is 8.87 percent. What is the current market price (intrinsic value) of the bonds?

Round the answer to two decimal places.

Your Answer:

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