Imprudential inc has an unfunded pension

Dinero Bank offers you a $59,000, four-year term loan an annual interest rate of 7 percent. What will your annual loan payment be? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Annual loan payment

$

A Japanese company has a bond outstanding that sells for 89 percent of its ¥100,000 par value. The bond has a coupon rate of 4.80 percent paid annually and matures in 19 years.

What is the yield to maturity of this bond? (Round your answer to 2 decimal places. (e.g., 32.16))

Yield to maturity

%

Backwater Corp. has 7 percent coupon bonds making annual payments with a YTM of 6.4 percent. The current yield on these bonds is 6.75 percent.

How many years do these bonds have left until they mature? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Maturity of bond

years

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 15 years to maturity, and a coupon rate of 6.9 percent paid annually.

If the yield to maturity is 8.0 percent, what is the current price of the bond? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Current price

€

Feeback Corporation stock currently sells for $78 per share. The market requires a return of 9.4 percent on the firm’s stock. If the company maintains a constant 2.7 percent growth rate in dividends, what was the most recent dividend per share paid on the stock? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))

Dividend paid per share

$

First City Bank pays 6 percent simple interest on its savings account balances, whereas Second City Bank pays 6 percent interest compounded annually.

If you made a $72,000 deposit in each bank, how much more money would you earn from your Second City Bank account at the end of 10 years? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Difference in accounts

$

Toadies, Inc., has identified an investment project with the following cash flows.

Year

Cash Flow

1

$

1,575

2

1,695

3

1,780

4

1,830

If the discount rate is 7 percent, what is the future value of the cash flows in year 4? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Future value

$

If the discount rate is 12 percent, what is the future value of the cash flows in year 4? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Future value

$

If the discount rate is 23 percent, what is the future value of the cash flows in year 4? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Future value

$

Although appealing to more refined tastes, art as a collectible has not always performed so profitably. During 2003, an auction house sold a sculpture at auction for a price of $10,291,500. Unfortunately for the previous owner, he had purchased it in 1999 at a price of $12,337,500.

What was his annual rate of return on this sculpture? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Annual rate of return

%

Keenan Co. is expected to maintain a constant 4.0 percent growth rate in its dividends indefinitely. If the company has a dividend yield of 5.8 percent, what is the required return on the company’s stock? (Round your answer to 2 decimal places. (e.g., 32.16))

Required return

%

Find the EAR in each of the following cases (Use 365 days a year. Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)):

Stated Rate (APR)

Number of Times Compounded

Effective Rate (EAR)

8.3

%

Quarterly

%

17.3

Monthly

13.3

Daily

10.3

Infinite

Imprudential, Inc. has an unfunded pension liability of $577 million that must be paid in 15 years. To assess the value of the firm’s stock, financial analysts want to discount this liability back to the present.

If the relevant discount rate is 7.0 percent, what is the present value of this liability? (Enter your answer in dollars not in millions. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Present value

$

Lohn Corporation is expected to pay the following dividends over the next four years: $11, $7, $6, and $3.50. Afterward, the company pledges to maintain a constant 4 percent growth rate in dividends forever. If the required return on the stock is 14 percent, what is the current share price? (Round your answer to 2 decimal places. (e.g., 32.16))