ASSIGNMENT

Remember, read the questions, and don’t overthink them.

You can answer all questions  in excel ( including the short written answers)

  • You need to buy a computer system in 3 years for $37,000. The interest rate is 5 %. How much do you set aside now to buy the system?
  • You have 9,000 set aside now, and it is expected to purchase $10,000 in new equipment in 5 years. The assumed interest rate is 8.5 %. Do I have enough capital set aside to make this purchase?
  • As US treasury has a semi-annual coupon of 6 %, and it matures in 15 years. The yield to maturity is 5 %.

Calculate the present value of the coupons.

Calculate the present value of the maturity value.

  • Suppose you have 25 years to retire and save 8,000 per annum ( paid semi-annually in arrears) at an assumed investment rate of 7%.

What is the value of my retirement account in 25 years?

  • Assume the following cash flows and calculate the IRR

-765,000 ( T0)

215,000 (T1)

25,000 (T2)

605,000 (T3)