Problem Set Corporate Finance

PROBLEM SET 5: INTEREST RATES, AMORTIZING LOANS, BOND VALUATION, fall VALUATION 1. A typical credit card agreement quotes an entertain tell of 18 per centum APR. Monthly payments atomic number 18 required. What is the existent interest estimate you pay on such a credit card? 2. After carefully going everyplace your budget, you have determined you can impart to pay €632 per month toward a new sports car. You call up your local strand and find out that the going rate is 1 percent per month for 48 months. How a lot you can borrow? 3. You ran a little short on your spring break vacation, so you put €1,000 on your credit card. You can only afford to make the minimum payment of €20 per month. The interest rate on the credit card is 1.5 percent per month. How long leave alone you need to pay off the €1,000? 4. Suppose you borrow €10,000. You are going to repay the contribute by making equalise annual payments for five courses. The interest rate on the loanword is 14 percent per year. Prepare an amortization schedule for the loan. How much interest give you pay over the life of the loan? 5. You have recently finished your Master degree and you hope to purchase a new BMW immediately. The car costs astir(predicate) €21,000. The bank quotes an interest rate of 15 percent APR for a 72-month loan with a 10 percent down payment. What will your monthly payment be?

What is the legal interest rate on the loan? 6. A gravel has a 10 percent coupon rate and a €1,000 face value. entertain is paid semiannually, and the bring together has 20 years to matureness. If investors require a 12 percent yield, what is the bonds value? What is the effective annual yield on the bond? 7. A bond carries an 8 percent coupon, paid semiannually. The par value is €1,000, and the bond matures in six years. If the bond currently sells for €911.37, what is its yield to maturity? What is the effective annual yield? 8. Company X is judge to pay dividends of $5.50 a share in 1 years time and $5.80 a share in 2 years time, after which its stock is expected to sell at $91.... If you want to get a full essay, order it on our website: Ordercustompaper.com

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