Question: hello, I need help with the below attachment, please. with step by step calculations and not just giving the answers. thanks! INTEREST RATES PROBLEM SET
hello, I need help with the below attachment, please. with step by step calculations and not just giving the answers.
thanks!

INTEREST RATES PROBLEM SET II 1. What is the present value of $1,000 in two years at an interest (discount) rate of 5% assuming: a) annual compounding b) semi-annual compounding 2. Assume that the interest (discount) rate in 1) now rises to 6%. Calculate: a) the new price under annual compounding b) the percentage change in price (this is the change in price divided by the original price, multiplied by 100). 3. What is the present value of $1,000 in five years assuming annual compounding: a) at an interest (discount) rate of 5% b) at 6% c) What is the percentage change between a) and b)? Compare this to 2b). 4. What is the present value of $1,000 in three months: a) at an interest rate of 2.5% b) at 3.5% c) What is the percentage change? Don't forget to the money market rules. 5. You invest $90 now. What must be the interest rate in order for you to receive $100 in 2 years if interest is: a) b) c) d) simple compounded annually compounded semi-annually compounded quarterly 6. You invest $99 now (November 26 2015). What must be the interest rate in order for you to receive $100 in six months? 7. What must be the (annual compound) interest rate in order for $900 invested today to grow to $1,000 in: a) 1 year b) 10 years 8. Assume the price of $1,000 in ten years is $900 today. Calculate the implied interest (discount) rate assuming: a) annual compounding b) quarterly compounding 9. You started a company with $250,000 of your own money. After ten years you sold it for $3.5 million. You didn't take any money out during these years (i.e., all profits re-invested). What is your Compound Annual Growth Rate? 10. An asset will pay $500 in one year plus $500 in two years. Calculate: a) the present value assuming 4% (annual comp) interest rate for each cash flow b) the present value assuming 5% (annual comp) interest rate for each cash flow c) the percentage change between a) and b). Compare this to 2b). 11. An asset will pay $500 in one year plus $500 in two years. Calculate its present value assuming 4% (annual comp) interest rate of 4% for the first cash flow and 5% for the second. 12. An asset will pay $500 in one year plus $500 in two years. Assume its price is $934. If each cash flow is discounted by the same interest rate, what must that rate be? This is known as \"yield-tomaturity.\" 13. Calculate the prices of the following securities, all discounted at an annually compounded 4% rate: a) $100 in ten years b) Annuity paying $10 every year for the next ten years. c) Perpetuity paying $5 every year. 14. Calculate the percentage change in price for all three securities in 13. if the discount rate rises to 5%. 15. Consider a ten-year bond, with coupons paid annually and a face value of 100. Assumer a yieldto-maturity (also known as yield) of 4%. Use the formula in the Syllabus Notes (unit Four, part I, end of section C, \"Another way. . . \") to calculate its price if the coupon is: a) 10 b) 5 c) 0 16. Calculate the percentage change in price for the three bonds in 15. if the yield increases to 5%. Compare these to 13). 17. You started a company with $250,000 of your own money. One year later you need to add $100,000. At the end of the fourth year you pay yourself a dividend of $50,000, and after five years you sold it for $3 million. What is your Infernal Rate of Return? 18. A five-year bond with an annual coupon of 6 has a price of 101. What is its yield-to-maturity? You solve for this the same way you solve for IRR in 17
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