UNIT 2: TEXTBOOK PROBLEMS
UNIT 2: TEXTBOOK PROBLEMS
CHAPTER 4: PROBLEM 2 (a through c)
A.
B.
C.
Present Value
3,200
3,200
3,200
Interest Rate
6%
8%
6%
Number of Years
10
10
20
Future Value =
CHAPTER 4: PROBLEM 3
A.
B.
C.
D.
Future Value =
15,451
51,557
886,073
550,164
Interest Rate
7%
9%
14%
16%
Number of Years
12
8
19
24
Present Value =
CHAPTER 4: PROBLEM 4
A.
B.
C.
D.
Present Value =
217
432
41,000
54,382
Future Value
307
896
162,181
483,500
Number of Years
3
10
13
26
Interest Rate
CHAPTER 4: PROBLEM 5
A.
B.
C.
D.
Present Value =
625
810
18,400
21,500
Future Value
1,284
4,341
402,662
173,439
Interest Rate
9%
11%
7%
10%
Number of Years (or Periods)
CHAPTER 4: PROBLEM 11
Discount Rate
5%
13%
18%
Year 1:
$960
$960
$960
Year 2:
$840
$840
$840
Year 3:
$1,935
$1,935
$1,935
Year 4:
$1,350
$1,350
$1,350
Present Value @ 5%, 13%, and 18% =
(Note: Use the built-in NPV formula in
Excel.)
CHAPTER 5: PROBLEM 2
A.
Settlement
(Think of Settlement as the beginning of the
duration of the bond.)
Maturity
(Think of Maturity as the end of the duration of
the bond.)
Rate
(Coupon Rate)
YTM
(Yield to Maturity or Required Rate of Return)
Redemption
(Bonds Face Value, Par Value, or Fair Price; Note
that is $100, not $1,000. You make the adjustments by multiplying the answer
by 10.)
Frequency
(Coupon payments are semiannual, so you put in a
2. If they are annual, then you input a 1.)
Basis
(Always leave it blank.)
Bond Price
(The answer. But you need to multiply it by 10 to
get the actual bond price.)
Multiply by 10
(Microsoft gives the bond price in 2 digits. You
need to multiply it by 10 to get the actual bond price.)
CHAPTER 5: PROBLEM 3
Dividend Payment
$1.99
Dividend Growth Rate
4.50%
ZYX Stock Price
$31
Required Return =
CHAPTER 6: PROBLEM 4
Dividend
$2.65
Dividend increase per year
4.75%
Required Return (Return on Investment)
11%
Stock Price =
