Question

If you are saving $ 150 per month, and receive 2.5 % interest compounded continuously on your savings, how much will you have at the end of 10 years?

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2) If you had purchased some furniture for $6,500, to be repaid over 24 months at 13.5% interest compounded monthly, and wanted to pay it off after the 3^rd. payment, how much would you still owe?

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3) If you won the lottery, and were told you would get $ 1,000.00 at the beginning of each month for 20 years, how much would that be worth to you today if you had discounted it at 5 % compounded monthly?

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4) Which statement is true?

   A. From a legal perspective, preferred stock is a form of corporate equity.

   B. All classes of stock must have equal voting rights per share.

   C. Common shareholders elect the corporate directors while the preferred shareholders vote on mergers and acquisitions.

   D. Preferred dividends provide tax-free income to individual investors.

   E. Preferred shareholders prefer noncumulative dividends over cumulative dividends.

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5) If XYZ company’s stock just paid a $2.00 annual dividend. They expect this dividend to grow at 4.0% per year, and you require a 7.0% rate of return. What should you be willing to pay for a share of this stock?

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6) A 5.0% bond has a face value of $1,000, annual interest payments, a 6.25% yield to maturity, and will mature in 7 years. What is the current market price of this bond?

Answer 1

1)

future value = 150*(e^{2.5%/12)*12*10}-1)/e^2.5%/12-1)

=20,424.31

2)