If I deposit and save my $50,000 inheritance into an annuity at 7%, what will I have in 30 years?

  1. If I deposit and save my $50,000 inheritance into an annuity at 7%, what will I have in 30 years?

 

 

  1. If I save $3,000 per year into a Roth IRA and expect to receive a 9% return per year..how much will I accumulate in 30 years?

 

  1. If I want to have $5,000,000 saved in a retirement account in 40 years and I am starting with nothing, how much do I need to invest yearly at 12%?

 

  1. If I want to have $5,000,000 saved in a retirement account in 40 years and I am starting with nothing, how much do I need to invest yearly at 12%?

 

 

  1. How much time is required to save $50,000 for a down payment for a home if I can save $300 per month in a money market fund at 4% APR and I just deposited $10,000?

 

 

  1. If I know I will need $60,000 in 5 years for my first year in college and my aunt wants to help me today with a deposit of some amount, how much should I request of her if I knew I could save at 6%?

 

  1. Same as above but this time my aunt would like to invest systematically every year. She deposits $5,000 today.

 

  1. Same as above but this time my aunt would like to invest systematically every year. She deposits $15,000 today.

 

  1. A parcel of land costs $600,000. For an additional $800,000 you can build a motel on the property. The land and the motel should be worth around $1,600,000 next year. Now suppose that similar commercial real estate investments with the same risk as this investment offer a 10% expected return. Would you build the motel? Why or why not? What is this project’s Internal Rate of Return? What does this number suggest?

 

  1. A factory costs $900,000. You estimate that it will generate an inflow after operating costs of $170,000 a year for 10 years. If the opportunity cost of capital is 14%, is this a positive deal for shareholders? What is its Internal Rate of Return?

 

  1. A $1000 bond has a current yield of 5 and a coupon rate of 6%. What is the bond’s price?

 

  1. A 5 year bond pays annually $70 and sells for $965. What’s its coupon rate, current yield, and yield-to-maturity?

 

  1. If the above company wants to issue new 5-year bonds, what will be the coupon rate?

 

  1. A bond has 8 years till maturity, has a coupon payment of $60, and trades for $1,175. What’s its current yield? Yield-to-maturity?

 

  1. Nustar has issued 9% annual coupon bonds that are now selling at a yield-to-maturity of 10% with a current yield of 9.8375%. What is the remaining maturity for these bonds?

 

 

  1. A stock sells for $50.00. The next dividend will be $3.50 per share. If the return on equity is 15.5% and the company reinvests 30% of its earnings back into the company, what must the discount rate be?

 

  1. Justin’s Boot Company just paid its annual dividend of $3.50 per share. It is anticipated that the dividend will grow at 3% indefinitely.

 

  1. What should the stock sell at? (The discount rate is 8%)
  2. What would it be if the discount rate had dropped to 5%?

              Why did your answer change?

 

  1. Tesoro will pay a $3.75 dividend in one year. It now sells for $35.50 per share with other oil companies in the same industry providing an expected rate of return of 12%. What must be the expected growth rate of Tesoro’s dividends?

 

  1. A stock sells for $40.00. The next dividend will be $4.00 per share. If the return on equity is 15% and the company reinvests 40% of its earnings back into the company, what must the discount rate be?

 

  1. San Antonio Boot Company just paid it’s annual dividend of $3.00 per share. It is anticipated that the dividend will grow at 5% indefinitely.

 

  1. What should the stock sell at? (the discount rate is 15%)
  2. What would it be if the discount rate had dropped to 12%?

             Why did your answer change?