1. Calculate the following time value of money:
a. If I am to receive $10k in 5 years, given a 5%
rate of return, what would be the present value of this amount?
b. If I put $7k into the bank @ 3% interest for 10
years, what is the future value of this amount?
c. If I deposit $1k a year into an account for 10
years @ 2%, what is the future value of that account?
d. What is the FUTURE value of $1k a year deposited
for 10 years @ 4% interest?
2. Why would an investor agree not to take a
dividend and agree to let a firm reinvest earnings back into a firm?
3. Please explain the different capital budgeting
techniques and discuss the pros and cons.
4. Please calculate the value of a 30-year bond
with a 10% coupon, that is due in 8 years, with current interest rates of
6%. Please explain why it would be a premium or discount bond.
Please explain what is a
callable bond. Why would a firm call a