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# What Interest is Joe paying on the loan

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Joe's Dockyard is financing a new boat with an amortizing loan of \$24,000 which is to be repaid in 10 annual installments of \$4,247.62 each. What interest rate is Joe paying on the loan?

a. 18.9%

b. 17.7%

c. 14.0%

d. 12.0%

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Joe's Dockyard is financing a ...

#### Solution Summary

Solution helps in estimating interest is Joe paying on the loan

\$2.19

## Financial statement analysis bonds

I need help with homework assignment, please.

1. (Financial Statement Analysis)

Consider the following sets of financial statements and answer the questions that follow:

a. To which firm would you prefer to lend money? Why?

b. In which firm would you prefer to invest? Why?

2. (Time Value of Money - Monthly Loan Payments)

Best Buy has a flat-screen HDTV on sale for \$1,995. If you could borrow that amount from First National Bank of St Louis at 6% for 1 year, what would be your monthly loan payments?

3. (Time Value of Money - Present Value)

You would like to have \$1,000,000 accumulated by the time you turn 65, which will be 40 years from now. How much would you have to put away each year to reach your goal, assuming you're starting from zero now and you earn 5% annual interest on your investment?

4. (Risk & Return)

You hold a portfolio of stocks consisting of the following:

Stock Beta Current Value

John Deere 1.0 \$20,000
BankAmerica 0.6 \$23,000
McDonalds 0.7 \$18,000
Boeing 1.1 \$16,000
Total: \$77,000

a. What is the beta of the portfolio?

b. You have decided to sell Boeing for \$16,000 and to use the proceeds to buy \$16,000 of Raytheon stock with a beta of 1.5. After the transaction is complete, what will be the new beta of the portfolio? (Disregard any commissions on the buy and sell transactions.)

5. (Risk & Return)

a. Define the Capital Asset Pricing Model.

b. Explain what a stock's "beta" is.

c. If the risk-free rate is 1% and the expected rate of return on the stock market is 7%, what is the required rate of return per the CAPM for a stock that has a beta of 1.2?

6. (Bond valuation)

a. Joe's Company's bonds have 10 years remaining to maturity. Interest is paid annually, the bonds have a \$1,000 par value, and the coupon interest rate is 6%. The bonds have a yield to maturity (YTM) of 9%. Given these conditions, what should be the current price of these bonds?

b. Jane's Company's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a \$1,000 par value, and the coupon interest rate is 7%. The bonds have a current market price of \$850. Given these conditions, what should be the yield to maturity (YTM) of these bonds?

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