Assignment

1) Calculate the future value of 4,600 received today if it deposited at 9 percent for three years.

2) Calculate the present value of 89,000 to be received in 15 years ,assuming an opportunity cost of 14 percent.

3) Nico establishes a seven-year,8 percent loan with a bank requiring annual end-of-year payments of 960.43. Calculate the original principal amount.

4) Mr.Brown has been awarded a bonus for his outstanding work. His employer offers him a choice of a lump-sum of 5,000 today or an annuity of 1,250 a year for the next five years. Which option should Mr.Brown choose if his opportunity cost is 9 percent. ( I have the answers but want to make sure it is correct) based on the above table, on this trading day, the number of ford bonds which changed hands was ?

Based on the above table, assume this bonds face value is 1,000?. what is the bonds current market price?

Based on the above table, what is the last yield for this bond?

5) Tangshan Coal, Inc. just issued a 10 percent, 25 year bond with 1,000 par value that pays interest semiannually .

a) How much can investor expect in annual interest (in dollars)
b) How much can the investor expect in interest every six months (in dollars)
c) How much can the investor expect in par value at the end of the 25th year?

(a) $100
(b) $50
(c) $1,000

6) What is the value of an asset which pays 200 a year for the next 5 years and can be sold for 1,500 at the end of five years from now ? Assume that the opportunity cost is 10 percent?