ASSUME that in 25 years you will need $500,000 for your retirement (i.e. retirement is actually 25 years away, and you want to have saved $500,000). How much money would you have to put into a bank today to accumulate this if your money will earn 13.2% per year (assume annual compounding)?   Answer to the nearest dollar (i.e. units of dollars with no decimals).

 

2.  The government has issued a zero coupon bond that will pay $1000 in 25 years. The bond will pay no interim coupon payment. 

What is the present value of the bond if the discount rate is 7.8%? 

 

3  A firm's capital budgeting project requires equipment that costs $92710 and will be depreciated on a straight-line basis (equal annual amounts) over 7 years to a $16483 book value. What is the depreciation each year over the machine's 7 year life?

 

4. Assume the risk free rate is 4.5% and the expected return on the market is 14.1%. Based on the CAPM, What should be the rate of return for security having a beta of 1.2?  

Answer rating: 100% (QA)

01 Using the future value formula FV PV x 1 rn where FV is the future value PV is the present value ... View the full answer