Suppose you will receive $5 000 per year for four years at the beginning of each year
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Question:
- Suppose you will receive $5 000 per year for four years at the beginning of each year and that your rate of interest is 10%. Calculate the present value of the annuity [4]
- You have just been given a job whose initial salary is $200 000 per annum. The salary is paid annually at the end of each year. You anticipate that the salary will be growing at a rate of 5% p.a. until you retire after 20 years. Your required rate of return is 10%. Calculate the present value of your lifetime salary receipts. [5]
- Assume you borrow $70 000. You are required to pay $11 396.93 per annum at the end of each year for a period of 15 years. What interest rate or cost of capital would you be paying? [5]
- An investor bought a $1 000 par value bond on July 16, 2015, with coupon payments due on July 2 and January 2. The coupon rate is 20% (unless otherwise stated, coupon rate is always p.a.). Calculate the accrued interest as at July 16. Assume a 30/360-day count convention [6]
A $1 000, 8% redeemable preference share has 8 years left to maturity. Calculate its value if the required rate of return or YTM is 9%.
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
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