Chapter 9

2. What is the present value of:

 

a.) $8,000 in 10 years at 6 percent?

 

b.) $16,000 in 5 years at 12 percent?

 

c.) $25,000 in 15 years at 8 percent?     

 

 

5. If you invest $12,000 today, how much will you have:

 

a.) In 6 years at 7 percent.

 

b.) In 15 years at 12 percent.

 

c.) In 25 years at 10 percent.

 

d.) In 25 years at 10 percent (compounded semiannually)?

 

 

Chapter 10

3. Barry’s Steroids Company has $1,000 par value bonds outstanding at 12 percent interest. The bonds will mature in 50 years. Compute the current price of the bonds if the percent yield to maturity is:

 

a.) 4 percent.

 

b.) 14 percent.

 

8. Got to Table 10-1 on page 291, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) go from 10 percent to 7 percent.

 

a.) What was the bond price at 10 percent?

 

b.) What is the bond price at 7 percent?

 

c.) What would be your percentage return on the investment if you bought when rates were 10 percent and sold when rates were 7 percent?