Business Finance Help for College and University Students

Managerial Finance 476

Discussion Question #2 Your company is a retailer and needs fairly high capital costs to open new stores: lease costs, store build-out and inventory. The cost to open each store is calculated to be $650,000 per store and the President has just told several analysts' tracking the company, on a conference call, that the company ...continues

Managerial Finance 476 (II)

4. How much would you have to invest today to receive: a. $12,000 in 6 years at 12 percent? b. $15,000 in 15 years at 8 percent? c. $5,000 each year for 10 years at 8 percent? d. $40,000 each year for 40 years at 5 percent?

Managerial Finance 476 (II)

7. Mrs. Crawford will receive $6,500 a year for the next 14 years from her trust. If an 8 percent interest rate is applied, what is the current value of the future payments?

Managerial Finance 476 (II)

19. Your grandfather has offered you a choice of one of the three following alternatives: $5,000 now; $1,000 a year for eight years; or $12,000 at the end of eight years. Assuming you could earn 11 percent annually, which alternative should you choose? If you could earn 12 percent annually, would you still choose the same alter ...continues

Time Value of Money. You need $23,956 at the end of nine years, and your only investment outlet is a 7 percent long-term certificate of deposit. a. What single payment could be made at the beginning of the first year to achieve this objective? b. What amount could you pay at the end of each year annually for nine years to achieve this same objective?

20. You need $23,956 at the end of nine years, and your only investment outlet is a 7 percent long-term certificate of deposit (compounded annually). With the certificate of deposit, you make an initial investment at the beginning of the first year. a. What single payment could be made at the beginning of the first year to achi ...continues

Managerial Finance 476 (II)

21. Beverly Hills started a paper route on January 1, 1995. Every three months, she deposits $300 in her bank account, which earns 8 percent annually but is compounded quarterly. On December 31,1998, she used the entire balance in her bank account to invest in a certificate of deposit at 12 percent annually. How much will she h ...continues

Managerial Finance 476(II): Mortgages: annual payments, interest over the life of the loan,

Jim Thomas borrows $70,000 toward the purchase of a home at 12 percent interest. His mortgage is for 30 years. a. How much will his annual payments be? (Although home payments are usually on a monthly basis, we shall do our analysis on an annual basis for ease of computation. We will get a reasonably accurate answer.) b. How m ...continues

Managerial Finance 476 (II)

22. Ecology Labs, Inc., will pay a dividend of $3 per share in the next 12 months(D1). The required rate of return (Ke) is 10 percent and the constant growth rate is 5 percent. a. Compute Pn. (In the remaining questions for problem 22 all variables remain the same except the one specifically changed. Each question is independ ...continues

Price of bonds for different maturity dates

4. The Hartford Telephone Company has a $1,000 par value bond outstanding that pays 11 percent annual interest. The current yield to maturity on such bonds in the market is 14 percent. Compute the price of the bonds for these maturity dates: a. 30 years. b. 15 years. c. 1 year. Then graph the relationship in a manner si ...continues

Managerial Finance 476 (II)

17. The preferred stock of Denver Savings and Loan pays an annual dividend of $5.60. It has a required rate of return of 8 percent. Compute the price of the preferred stock.