PV = FV = N = PMT = I / Y =

1. You're trying to save to buy a $650,000 car. You have $200,000 today that can be invested at your bank. The banks pays 2.1% annual interest. How long will it be before you have enough to buy the car?

2. You are looking at an investment that will pay $1,500 in 10 years if you invest $1,000 today. What is the implied rate of interest?

3. Suppose you have a 1-year old son and you want to provide $200,000 in 17 years towards his college education. You currently have $20,000 to invest. What interest rate must you earn to have the $200,000 when you need it?

4. Suppose you take on a mortgage with a loan balance of $765,000, the mortgage rate is 4%. The mortgage is a 30-year fixed rate. Create an amortization table of the mortgage for the first three years.

5. Suppose your goal for retirement is $2,000,000. Assuming a 6% rate with $20,000 to start, how much do you need to put away each year to retire with $2,000,000 assuming thirty years of working.

6. Lycan Inc. has 6% coupon bonds on the market that have 9 years left to maturity. The bonds make annual payments and have a par value of $1,000. If the YTM on these bonds is 7.4%, what is the current bond price?

7. The Timberlake Co. has 5% coupon bonds in the market with 9 years left to maturity. The bonds make semi-annual payments and have a par value of $1,000. If the bonds currently sell for $961.50, what is the YTM. 8. Volbeat Co. has bonds on the market with 10 years to maturity, a YTM of 6.5%, a par value of $1,000, and a current price of $945. The bonds make semiannual payments. What must the annual coupon rate be on the bonds? 9. Gilmore Inc. just paid a dividend of $2.35 per share on its stock. The dividends are expected to grow at a constant rate of 4.0% per year, indefinitely. If investors require a return a 10.0% on this stock, what is the current price?

Table 1
Year	0	1	2	3
Cash Flow	-$25,000	$10,000	$8,000	$12,000

Table 1 Questions

1. What is the NPV?
2. What is the IRR
3. Calculate the payback period
4. Calculate the profitability index.
5. Invest or Not?

Initial Equipment	$61,000
Project Life	3 Years
Sales	$55,000
Variable Costs	$25,000
Fixed Costs	$10,000
Tax Rate	28%
Cost of Capital	10%
Ending Book Value	$10,000
Sales Price at Year 3	$5,000
Net Working Capital	$10,000

1. What is the initial cost?
2. What is the operating cash flow (OCF)?
3. What is the terminal non-operating cash flow (TNOCF)?
4. What is the NPV?

Year	Price
0	$100
1	$119
2	$102.34
3	$112.57

1. What are the returns for Years 1 to 3?
2. What is the average return?
3. What is the standard deviation? Show all work for the standard deviation.

Stock Info	Amount	Bond Info	Amount
Shares Outstanding	100	Face Value	$1,000
Stock Price	$15	Coupon	7%
Beta	1.5	YTM	8%
Risk Free Premium	3%	N	10
Market Risk Premium	9%	Payments	Annual
Book Value	$900	Tax	.035

1. What is the cost of debt?
2. What is the cost of equity?
3. What is the weight on debt and equity?
4. What is the WACC?