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Question: Project Funding Assignment It is January 1, 2005. Director of Special Projects Rakesh Parameshwar...

Project Funding Assignment It is January 1, 2005. Director of Special Projects Rakesh Parameshwar has a planned $20.5 million project, which will require the following expected cash flows between 2005 and 2009: Date Cash Requirement ($ millions) 01-Jun-05 7.50 01-Jan-06 4.50 01-Jun-06 1.00 01-Jan-07 1.00 01-Jun-07 1.00 01-Jan-08 1.00 01-Jun-08 1.00 01-Jan-09 3.50 Rakesh turns to his Director of Financial Planning, Christine Reyling, and asks her to ensure that funding is available for the project. Christine is considering buying a portfolio of bonds, with cash flows from the bonds arranged to coincide with the needs of Rakeshs project. The following bonds are available, and can be purchased in any quantity: Maturity 01-Jun-05 01-Jan-06 01-Jun-06 01-Jan-07 01-Jun-07 01-Jan-08 01-Jun-08 01-Jan-09 Coupon 7.00% 7.50% 6.75% 0.00% 10.00% 9.00% 10.25% 10.00% Price 1.00 1.03 1.02 0.81 1.16 1.15 1.23 1.25

What is the minimum cost portfolio of these bonds that will meet the projects requirements? Assume that any cash can be reinvested at an annual rate of 4%, and dont worry about discounting.

What is the cost of capital over time for this project? In other words, if Rakesh decides he will need an additional dollar in June of 2007, what is the present value of that dollar? What is this present value for all relevant periods for the duration of the project?

What is the implied yield for each of these periods? For example, if Rakesh needs an additional $1 million in June of 2007 and you conclude that the present value of this $1 million is $0.739 million, what is the implied rate of return on this $0.739 million that will be worth $1 million in June of 2007?

21:04 Awal 20% Project Funding Assignment - Read only READ ONLY - This is an older file format. To make ch.. Prosjekt Funding Assignment 1.23. Testare Special Report $385Wowwych Gabi Bantura tote bagate le partito bond with contender code with the Thelewa wale per que GT 7708 TXI What is to protetti e themes ammanlenamarnimum 4%, mang What continetul la the world destes te weten tender of 20 step valara turt aalar Weertha the date of the main depleted Forestupendo www.leseryepes Tilaratta 20 That inted as saturatha Set will be = Paragraph 2 Styles Project Funding Assignment It is January 1, 2005. Director of Special Projects Rakesh Parameshwar has a planned $20 million project, which will require the following expected cash flows between 2005 and 2009 Cash Requirement Date (5 millions) 01-Jun- 750 01-Jan-06 4.50 01-Jun-16 1,00 01-Jan 07 100 01-Jun-2 100 01-Jan-09 100 01-Jun- 100) 01 Jan 09 3.5) Rakesh turns to his Director of Financial Planning Christine Reyling, and asks her to ensure that funding is available for the project. Christine is considering buying a portfolio of bonds, with cash flows from the bonds arranged to coincide with the needs of Rakesh's project. The following bonds are available, and can be purchased in any quantity: Maturity 01-Jun-05 01-Jan-06 01-Jun-06 01 Jan 07 01 Jun 07 01-Jan-08 01-Jun-08 01-Jun-09 Coupon 7.005 7.50% 6,75% 0.005 10.00% 9.00% 10.25 10.00% I'rice 1.00 1.03 1.02 0.81 1.16 1.15 1.23 (a) What is the minimum cost portfolio of these bonds that will meet the project's requirements? Assume that any cash can be reinvested at an annual rate of 4%, and don't worry about discounting (b) What is the cost of capital over time for this project? In other words, it Rakesh decides he will need an additional dollar in June af 2007, what is the present value of that dollar? What is this present value for all relevant periods for the duration of the project? (c) What is the implied "yield" for each of these periods? For example, if Rakesh needs an additional $1 million in June of 2007 and you conclude that the present value of this $1 million is 50.739 million, what is the implied rate of retum on this $0.739 million that will be worth $1 million in June of 2007? 21:04 Awal 20% Project Funding Assignment - Read only READ ONLY - This is an older file format. To make ch.. Prosjekt Funding Assignment 1.23. Testare Special Report $385Wowwych Gabi Bantura tote bagate le partito bond with contender code with the Thelewa wale per que GT 7708 TXI What is to protetti e themes ammanlenamarnimum 4%, mang What continetul la the world destes te weten tender of 20 step valara turt aalar Weertha the date of the main depleted Forestupendo www.leseryepes Tilaratta 20 That inted as saturatha Set will be = Paragraph 2 Styles Project Funding Assignment It is January 1, 2005. Director of Special Projects Rakesh Parameshwar has a planned $20 million project, which will require the following expected cash flows between 2005 and 2009 Cash Requirement Date (5 millions) 01-Jun- 750 01-Jan-06 4.50 01-Jun-16 1,00 01-Jan 07 100 01-Jun-2 100 01-Jan-09 100 01-Jun- 100) 01 Jan 09 3.5) Rakesh turns to his Director of Financial Planning Christine Reyling, and asks her to ensure that funding is available for the project. Christine is considering buying a portfolio of bonds, with cash flows from the bonds arranged to coincide with the needs of Rakesh's project. The following bonds are available, and can be purchased in any quantity: Maturity 01-Jun-05 01-Jan-06 01-Jun-06 01 Jan 07 01 Jun 07 01-Jan-08 01-Jun-08 01-Jun-09 Coupon 7.005 7.50% 6,75% 0.005 10.00% 9.00% 10.25 10.00% I'rice 1.00 1.03 1.02 0.81 1.16 1.15 1.23 (a) What is the minimum cost portfolio of these bonds that will meet the project's requirements? Assume that any cash can be reinvested at an annual rate of 4%, and don't worry about discounting (b) What is the cost of capital over time for this project? In other words, it Rakesh decides he will need an additional dollar in June af 2007, what is the present value of that dollar? What is this present value for all relevant periods for the duration of the project? (c) What is the implied "yield" for each of these periods? For example, if Rakesh needs an additional $1 million in June of 2007 and you conclude that the present value of this $1 million is 50.739 million, what is the implied rate of retum on this $0.739 million that will be worth $1 million in June of 2007