Q: A 10-year bond is issued with a face value of
A 10-year bond is issued with a face value of $1,000, paying interest of $60 a year. If yields to maturity increase shortly after the T-bond is issued, what happens to the bond’s a. Coupon rate? b....
See AnswerQ: In February 2015 Treasury 4¾s of 2041 offered a semi
In February 2015 Treasury 4¾s of 2041 offered a semi-annually compounded yield to maturity of 2.70%. Recognizing that coupons are paid semi-annually, calculate the bond’s price.
See AnswerQ: In December 2005, Mid-American Energy brought online one of
In December 2005, Mid-American Energy brought online one of the largest wind farms in the world. It cost an estimated $386 million and the 257 turbines have a total capacity of 360.5 megawatts (mW). W...
See AnswerQ: A 10-year German government bond (bund) has a
A 10-year German government bond (bund) has a face value of €100 and a coupon rate of 5% paid annually. Assume that the interest rate (in euros) is equal to 6% per year. What is the bond’s PV?
See AnswerQ: The following table tracks the main components of working capital over the
The following table tracks the main components of working capital over the life of a four-year project. Calculate net working capital and the cash inflows and outflows due to investment in working ca...
See AnswerQ: Look again at Table 3.5. Suppose that spot interest
Look again at Table 3.5. Suppose that spot interest rates all change to 4%—a “flat†term structure of interest rates. a. What is the...
See AnswerQ: Ms. Espinoza is retired and depends on her investments for her
Ms. Espinoza is retired and depends on her investments for her income. Mr. Liu is a young executive who wants to save for the future. Both are stockholders in Scaled Composites, LLC, which is building...
See AnswerQ: The one-year spot interest rate is r1 = 5%
The one-year spot interest rate is r1 = 5% and the two-year rate is r2 = 6%. If the expectations theory is correct, what is the expected one-year interest rate in one year’s time?
See AnswerQ: Air conditioning for a college dormitory will cost $1.5
Air conditioning for a college dormitory will cost $1.5 million to install and $200,000 per year to operate. The system should last 25 years. The real cost of capital is 5%, and the college pays no ta...
See AnswerQ: a. The cost of a new automobile is $10,
a. The cost of a new automobile is $10,000. If the interest rate is 5%, how much would you have to set aside now to provide this sum in five years? b. You have to pay $12,000 a year in school fees at...
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