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Homework answers / question archive / 1) You have just purchased a new warehouse
1)
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You have just purchased a new warehouse. To finance the purchase, you've arranged for a 30-year mortgage loan for 80 percent of the $2,300,000 purchase price. The monthly payment on this loan will be $15,000. |
| a. | What is the APR on this loan? |
| b. | What is the EAR? |
2)
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What is the future value of $300 in 21 years assuming an interest rate of 10 percent compounded semiannually? |
Multiple Choice
$2,328.48
$2,212.05
$2,220.07
$408.66
$362.07
3)
| You deposit $1,100 at the end of each year into an account paying 10.1 percent interest. |
| a. | How much money will you have in the account in 16 years? |
| b. | How much will you have if you make deposits for 32 years? |
4)Bond X is noncallable and has 20 years to maturity, a 9% annual coupon, and a $1,000 par value. Your required return on Bond X is 12%; if you buy it, you plan to hold it for 5 years. You (and the market) have expectations that in 5 years, the yield to maturity on a 15-year bond with similar risk will be 8%. How much should you be willing to pay for Bond X today? (Hint: You will need to know how much the bond will be worth at the end of 5 years.) Do not round intermediate calculations. Round your answer to the nearest cent.
5) Last year Janet purchased a $1,000 face value corporate bond with an 10% annual coupon rate and a 20-year maturity. At the time of the purchase, it had an expected yield to maturity of 13.08%. If Janet sold the bond today for $1,051.15, what rate of return would she have earned for the past year? Do not round intermediate calculations. Round your answer to two decimal places.
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