** You must show your work step by step. (No credit
is given, if you just put the final results)
** You must put your name on all solution sheets. Solutions without name will
be ignored. You need submit your homework to Blackboard. Solutions emailed to
my email addresses will be ignored.
***You can use Excel for calculations if you wish,
but all solutions must be typed as Microsoft Word text. Please note that the
scanned versions or pictures are NOT accepted. Also, make sure to attach the
correct file when you submit your homework.
1. Revris Credit Union offers
to lend you $40,000 at a nominal rate of 7.5%, compounded monthly. The loan (principal plus interest) must be
repaid at the end of the year. South Commercial
Bank also offers to lend you the $40,000, but it will charge an annual rate of 8.0%,
with no interest due until the end of the year.
How much higher or lower is the effective annual rate charged by South Commercial
Bank versus the rate charged by Revris Credit Union?(1.5 points)
2. At a rate of 7.5%, what
is the future value of the following cash flow stream?
Years: 0 1 2 3 4
| | | | |
CFs: $0 $75 $225 $0 $300
3. Suppose 10-year T-bonds
have a yield of 5.30% and 10-year corporate bonds yield 6.75%. Also, corporate bonds have a 0.25% liquidity
premium versus a zero liquidity premium for T-bonds, and the maturity risk
premium on both Treasury and corporate 10-year bonds is 1.15%. What is the default risk premium on
corporate bonds? (1 point)
4. Silus Inc. is considering a project that has
the following cash flow and WACC data.
What are the project’s payback, discounted payback, NPV, and MIRR?(4
Year 0 1 2 3 4
Cash flows -$950 $525 $485 $445 $405
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more