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You are considering purchasing a new car that will cost you $28,000
You are considering purchasing a new car that will cost you $28,000. The dealer offers you 4.9% APR financing for 60 months (with payments made at the end of the month). Assuming you finance the entire $28,000 and finance through the dealer, your monthly payments will be ?
The Sisyphean Company is currently trading for $30.00 per share. The company is expected to pay a $2.50 dividend at the end of the year and its cost of equity is 14%. If the dividend payout rate is expected to remain constant, then the expected growth rate in the Sisyphean Company's earnings is closest to:
What is the yield to maturity of a two-year, risk-free, zero-coupon bond with a $1,000 face value and a price of $925?
Expert Solution
We can calculate the monthly payment by using the following formula in excel:-=pmt(rate,nper,-pv,fv)
Here,
Pmt = Monthly payment
Rate = 4.9%/12 = 0.4083% (monthly)
Nper = 60 periods (monthly)
PV = $28,000
FV = $0
Substituting the values in formula:
= pmt(0.4083%,60,-28000,0)
= $527.11 Or $527
Computation of the growth rate:-
Current stock price = D1 / (Cost of equity - Growth rate)
$30 = $2.50 / (14% - Growth rate)
14% - Growth rate = $2.50 / $30
Growth rate = 14% - 8.33%
= 5.67% Or 5.7%
We can calculate the yield to maturity by using the following formula in excel:-
=rate(nper,pmt,-pv,fv)
Here,
Rate = Yield to maturity
Nper = 2 periods
Pmt = 0
PV = $925
FV = $1,000
Substituting the values in formula:
= rate(2,0,-925,1000)
= 3.975%
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