1. An asset costs $100 today and promise payments of $50, $25, and $30 over the next...

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1. An asset costs $100 today and promise payments of $50, $25, and $30 over the next three years. What is the interest rate used to discount the cashflows back to the present?
2. A corporate bond has $100 par value, 5% coupon, and a ten year maturity. If its current price is $93, what is its YTM?
Create a data table with the YTM as the output variable. The column input is the price, start at $90 and go to $100 in increments of $1. What do you find?
ROE = NPM * TAT * EM (this is called the Dupont analysis)
NI/TE = NI/Sales * Sales/TA * TA/TE
3. A firm has a NPM of 10%, a TAT of 2x, and an EM of 1.5x. Determine the firm’s ROE.
4. If the firm’s NPM increases to 12% and TAT declines to 1.8x, what would be its new ROE?
5. If net income is 10% of sales and total equity is 90% of TA, what is TA if the ROE is 10% and sales are $100 billion? What kind of firms have high TAT?
6. If a bond is worth $97, what is the relationship between its coupon rate and its yield to maturity?
Create a data table showing the relationship.