Suppose that six-month interest rates (annualized) in Japan and the United States are 7 percent and 9 percent, respectively. If the spot rate is ¥142:$1 and the ninety-day forward rate is ¥139:$1 and the 180 day forward rate is : ¥152:$1 Which would be the best to invest in, where would be the best to borrow from?
(The following information relates to Questions 19 to 22) Firm X with a 40% tax rate is comparing two financing plans. Plan A involves 2,000 shares of common stock and $20,000 of debt. Plan B consists of 2,500 shares of common stock and $10,000 of debt. The annual interest rate is 5%. Presently, this company is all-equity
Use nominal rate 4.8% compounded monthly: (1) James and Jane retire with $500,000 in their retirement account. If they want that to last for 25 years, how much can they take out each month. (2) Nick and Nora are 30 and intend to retire at age 65; they are just starting a retirement plan. How much must they deposit each m
What I believe to be irrelevant information: making $42, 000/yr; minimum of 10% down on actual selling price; home insurance $1000/yr & property taxes $3100/yr paid separately from loan; payments will start one month from the time of purchase; no points. What I believe to be relevant information: asking price $139, 000; 15% d
Prescott Corporation issued ten thousand $1,000 bonds on January 1, 2006. They have a ten-year term and pay interest semiannually. This is the partial bond amortization schedule for the bonds. Payment Cash Effective Decrease in Outstanding Interest Balance Balance 0 11,487,747 1 400,000 344,632 55,368 11,432
For a fixed rate, a fixed principal amount, and a fixed compounding cycle, the return is an exponential function of time. Using the formula, A=P(1+r/n)nt , let r = 8%, P = 1,and n= 1 and give the coordinates (t,A) for the points where t=0,1,2,3,4. Round the A value to the tenth decimal place. Also show graph.
Very easy effective and nominal interest questions. I need full solutions for problems 4.6, 4.8, 4.11, 4.15, 4.19, 4.21, 4.30, 4.32, 4.37, 4.45, 4.54, 4.56. (See attached file for full problem description.) 4.6 For an interest rate of 12% per year compounded every 2 months, determine the nominal interest rate per (a) 4 m
1) You have just purchased a new warehouse. To finance the purchase, you've arranged for a 30-year mortgage loan for 80% of the $1 200 000 purchase price. The monthly payments on this loan will be $9 300. What is the APR on this loan? The EAR? 2) A local finance company quotes a 13 percent interest rate on one year loans. So
Case 7-1, Expensing Interest Now or Later is a scenario from Johnson and Johnson & Subsidiaries, Consolidated Statements of Earnings for 2001, 2000 and 1999. The first three questions relate to expensing and capitalizing interest , plus identifying it in the financial statements. The fourth question asks when capitalized int
In 2003, Betty invests $100,000 for a 25% partnership interest in an activity in which she is a material participant. The partnership reports losses of $300,000 in 2003 and $300,000 in 2004. Betty's share of the partnership's losses is $75,000 in 2003 and $75,000 in 2004. How much of the losses from the partnership can Betty
During 2004, Sophie paid the following interest charges: Home mortgage $5,000 On loan to purchase a new car 2,500 On student loan 800 If Sophie itemizes her deductions for 2004, the amount deductible for interest expense as an itemized de
Debt Securities - Presented below is an amortization schedule related to Kathy Baker Company's 5-year, $100,000 bond with a 7% interest rate and a 5% yield, purchased on December 31, 2004, for $108,660 Date Cash Received Interest Revenue Bond Premium Amortization Carrying Amount of Bonds 12/31/2004
The Rivoli Company has no outstanding debt and its financial position is given with the following data: Assets (book=market) $3,000,000 EBIT $500,000 Cost of equity, rs 10% Stock price, Po $15 Shares outstanding no 200,000 Tax rate, T (federal pl
You brought a home a year ago for 250,000, borrowing 200,000 at 10% on a 30 year term loan (with monthly payments). Interest rates have since come down to 9%. You can refinance your mortgage at this rate, with a closing cost that will be 3% if the loan.Your opportunity cost is 8%. Ignore tax effects How much would interest ra
Suppose a new process was developed that could be used to make oil out of seawater. The equipment required is quite expensive, but it would, in time, lead to very low prices for gasoline, electricity and other types of energy. What effect would this have on interest rates?
I need to know to figure this out using the pure expectations Theory. Expectation Theory - Interest rates on 4-year Treasury securities are currently 7 percent, while 6-year Treasury securities yield are 7.5%. If pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years fr
Consider three zero-coupon,$1,000 face-value bonds. Bond A matures one year from today, Bond B matures five years from today, and Bond C matures ten years from today. The current market interest rate is 11 percent per annum (effective annual yield). a. What is the current price of each bond? b. If the market interest rate su
The following table shows gold futures prices for varying contract lengths. Gold is predominantly an investment good, not an industrial commodity. Investors hold gold because it diversifies their portfolios and because they hope its price will rise. They do not hold it for its convenience yield. Calculate the interest rate face
See attached Excel file. Predetermined overhead rate, unit product cost, activity rates for cost pools, volume changes for Ellix Company
What are the two risk components of interest rate risk? Relative to them, what are the implications of holding a bond to its duration versus holding the bond to maturity? (Be careful to explain the relation of Duration to Interest Rate Risk.)
If $3000 is invested at 9% interest per year compounded continuously, how long will it take to double the amount invested?
At what annual interest rate, compounded continuously, will money triple in 10 years? a.) 7.99% b.) 8.99% c.) 9.99% d.) 10.99%
If $2,000 is invested at 7% annual interest compounded continuously, how much will accumulate in 2 years?
Please show how you get the answers 1. A $50 dollar computer program is on sale for $37.50. What is the percent decrease? 2. Peggy earns $10.68 per piece as a garment worker. What are her total wages if she had the following production rate? Monday 81, Tuesday 88, Wednesday 92, Thursday 93, and Friday 89. 3. Find the or
Please help with the following problem. P11-1A On January 1, 2006, the ledger of Shumway Software Company contains the following liability accounts. Accounts Payable $42,500 Sales Taxes Payable 5,800 Unearned Service Revenue 15,000 During January the following selected transactions occurred. (Please see fu
Part A. Micro Spinoffs, Inc. is issued a 20-year debt a year ago at par value with a coupon rate of 8%, paid annually. Today the debt is selling at $1,050. If the firm's tax bracket is 35%, what is its after-tax cost of debt? Part B. Micro Spinoffs also has preferred stock outstanding. The stock pays a dividend of $4/sha
A) Joe won a lottery jackpot that will pay him $12,000 each year for the next ten years. If the market interest rates are currently 12%, how much does the lottery have to invest today to pay out this prize to Joe over the next ten years? b) Mary just deposited $33,000 in an account paying 10% interest. She plans to leave the
On April 30th,2007, Empire Bank loaned $100,000 to a customer on a one year, 9% note: a) Compute the interest for the year ended December 31st, 2007 and 2008 for the customers note. b) How much in total would the customer pay the bank if he pays off the note early, say on November 30th, 2007
You intend to purchase a 10-year, $1,000 face value bond that pays interest of $60 every 6 months. If your nominal annual required rate of return is 10 percent with semiannual compounding, how much should you be willing to pay for this bond?
Please answer the following two problems: 1: Interest Rate Parity The current 90-day interest rate in the United States is 1 percent. The current 90-day interest rate in France is 2 percent. The current spot rate for the French franc (FF) is $0.18679/FF. If the interest rate parity (IRP) holds between the United States an