# Various Corporate Finance Problems

See the attached file.

CHAPTER 4: PROBLEM 2 (a through c)

A. B. C.

Present Value 2,500 2,500 2,500

Interest Rate 6% 8% 6%

Number of Years 10 10 20

Future Value =

CHAPTER 4: PROBLEM 3

A. B. C. D.

Future Value = 15,451 51,557 886,073 550,164

Interest Rate 7% 9% 14% 16%

Number of Years 9 6 21 27

Present Value =

CHAPTER 4: PROBLEM 4

A. B. C. D.

Present Value = 243 405 34,500 51,285

Future Value 307 896 162,181 483,500

Number of Years 3 10 13 26

Interest Rate

CHAPTER 4: PROBLEM 5

A. B. C. D.

Present Value = 625 810 18,400 21,500

Future Value 1,284 4,341 402,662 173,439

Interest Rate 7% 8% 13% 16%

Number of Years (or Periods)

CHAPTER 4: PROBLEM 11

Discount Rate 5% 13% 18%

Year 1: $850 $850 $850

Year 2: $740 $740 $740

Year 3: $1,090 $1,090 $1,090

Year 4: $1,310 $1,310 $1,310

Present Value @ 5%, 13%, and 18% = (Note: Use the built-in NPV formula in Excel.)

CHAPTER 5: PROBLEM 2

A.

Settlement (Think of Settlement as the beginning of the duration of the bond.)

Maturity (Think of Maturity as the end of the duration of the bond.)

Rate (Coupon Rate)

YTM (Yield to Maturity or Required Rate of Return)

Redemption (Bonds Face Value, Par Value, or Fair Price; Note that is $100, not $1,000. You make the adjustments by multiplying the answer by 10.)

Frequency (Coupon payments are semiannual, so you put in a 2. If they are annual, then you input a 1.)

Basis (Always leave it blank.)

Bond Price (The answer. But you need to multiply it by 10 to get the actual bond price.)

Multiply by 10 (Microsoft gives the bond price in 2 digits. You need to multiply it by 10 to get the actual bond price.)

CHAPTER 5: PROBLEM 3

Settlement (Think of Settlement as the beginning of the duration of the bond.)

Maturity (Think of Maturity as the end of the duration of the bond.)

Rate (Coupon Rate)

Pr (The bonds price per $100 face value)

Redemption (Bonds Face Value, Par Value, or Fair Price; Note that is $100, not $1,000.)

Frequency (Coupon payments are semiannual, so you put in a 2. If they are annual, then you input a 1.)

Basis: (Always leave it blank.)

YTM

CHAPTER 6: PROBLEM 2

Dividend Payment $2.85

Dividend Growth Rate 4.50%

ZYX Stock Price $84

Required Return =

CHAPTER 6: PROBLEM 4

Dividend $2.90

Dividend increase per year 4.75%

Required Return (Return on Investment) 11%

Stock Price = ?

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#### Solution Summary

The solution discusses various corporate finance problems and answers.