# Unit 8 Basic Questions

Question # 47008 | 2 years ago |
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$15 |
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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 bond?