Section B: 4 Problems (15 Marks) Use the space provided to answer each question under this...

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Section B: 4 Problems (15 Marks) Use the space provided to answer each question under this section. 1. (5 Marks) You plan to borrow $20,000 from a bank to buy a new car. The bank requires to repay the Calculate the annual payment needed to amortize the loan and then fill in the below table to show the loan fully in 5 years by making 5 equal end-of-year payments. The interest rate on the loan is 10%. amortization. CF = End-of- year Beginning- of-year principal Loan payment Interest Principal End-of-year balance 1 2 3 4 5 2. (3 Marks) Tim Sanchez wishes to determine the current value of the Mills Company bond. If the bond has a face value of $1,000, maturity of 10 years, coupons rate of 6% paid semi-annually and the required annual return on the bond is 10%, what is the value of this bond? 3. (3 Marks) Julie's X-Ray Company has recently paid $2.00 per share in common stock dividends. The company will allow its dividend to grow at 5 percent for 4 years, and after that the rate of growth will be 3 percent forever. What is the value of the stock if the required rate of return is 8 percent? Section B: 4 Problems (15 Marks) Use the space provided to answer each question under this section. 1. (5 Marks) You plan to borrow $20,000 from a bank to buy a new car. The bank requires to repay the Calculate the annual payment needed to amortize the loan and then fill in the below table to show the loan fully in 5 years by making 5 equal end-of-year payments. The interest rate on the loan is 10%. amortization. CF = End-of- year Beginning- of-year principal Loan payment Interest Principal End-of-year balance 1 2 3 4 5 2. (3 Marks) Tim Sanchez wishes to determine the current value of the Mills Company bond. If the bond has a face value of $1,000, maturity of 10 years, coupons rate of 6% paid semi-annually and the required annual return on the bond is 10%, what is the value of this bond? 3. (3 Marks) Julie's X-Ray Company has recently paid $2.00 per share in common stock dividends. The company will allow its dividend to grow at 5 percent for 4 years, and after that the rate of growth will be 3 percent forever. What is the value of the stock if the required rate of return is 8 percent?