global-financial-management-7

global-financial-management-7

Answer Problem 4-1; problem 4-2; problem 4-6; problem 4-8; and redo problem 4-6 by changing the word FVA to PVA; problem 5-1; problem 5-7 and Additional problems.

Additional Problems:

Problem 1:

A. Calculate the PV of $100 due in 5 years compounded monthly at 12%.

B. Calculate the FV of $1000 due in 3 years at 6%.

C. Calculate the FVA of $30 due at the end of each of the next 5 years at 4%.

D. Calculate the PVA of $30 due at the end of each of the next 5 years at 4%.

Problem 2:

Compute the EAR of 12% compounded monthly.

Problem 3:

You take out an amortized loan for $10,000. The loan is to be paid in equal installments at the end of each of the next 5 years. The interest rate is 8%. Construct an amortization schedule.

Problem 4:

A. Calculate the PV of $100 due in 5 years compounded daily at 12%.

B. Calculate the FV of $1000 due in 3 years at 6% compounded quarterly.

C. Calculate the FVA of $300 due at the end of each of the next 5 years at 4%.

D. Calculate the PVA of $300 due at the end of each of the next 5 years at 4%.

Problem 5:

Compute the EAR of 10% compounded daily.

Problem 6:

A bond was issued 3 years ago at a coupon rate of 6%. Since then, interest rates have declined to 4%. The bond matures 20 years from today. Compute the current market value of this bond.

Problem 7:

A bond was issued 2 years ago. It’s original maturity was 20 years. The coupon rate is 4% and the current YTM is 6%. Compute its intrinsic value.