Question: Can this be done by someone else because the others calculation were mostly wrong. A. On 1 September 2022 a company raises finance by agreeing
Can this be done by someone else because the others calculation were mostly wrong.
A. On 1 September 2022 a company raises finance by agreeing a six-month eurodollar loan for $10 million offered at an interest rate of 3.8 per cent. Calculate the cost of the loan in dollars. (1) on a 30/360-day count basis (180 days) (2) on a 365-day count, actual/365 basis (183 days) Q2. You purchase $1,000,000 worth of six-month US Treasury bills on the secondary market with a quoted yield per annum of 1.94 per cent. The bills have 100 days to maturity. How much would you pay? Use the actual/365-day count convention. B. As a winner of a lottery you can choose one of the following prizes: 1) 20 million now. 2) 30 million at the end of six years. 3) 1.6 million a year forever, starting in one year. C) 3 million for each of the next ten years, starting in one year. If the discount rate is 8 per cent, which is the most valuable prize? D. What is the present value of 100,000 to be received in ten years time when the interest rate (nominal annual) is 12 per cent and (a) annual discounting is used? (b) semi-annual discounting is used? E. Allan buys a car on hire purchase paying six annual instalments of 3,500, the first being an immediate cash deposit. Assuming an interest rate of 10 per cent is being charged by the hire-purchase company, how much is the current cash price of the car? F. Imagine that the market yield to maturity for five-year bonds in a particular risk class is 10 per cent. You buy a bond in that risk class which offers an annual coupon of 9 per cent for the five years, with the first payment in one year. The bond will be redeemed at par (100) in five years. (1) How much would you pay for the bond? (2) How much would you pay for the bond if you think that the company became less risky, and its yield to maturity should be 8 percent?
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