FIN 571 WEEK 5 ASSIGNMENT

Your finance text book sold 53,250 copies in its first year. The publishing company expects the sales to grow at a rate of 20 percent for the next three years, and by 10 percent in the fourth year. Calculate the total number of copies that the publisher expects to sell in year 3 and 4. (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final answers to the nearest whole number.)

Number of copies sold after 3 years                 

Number of copies sold in the fourth year                     

Find the present value of $3,500 under each of the following rates and periods.

(If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final answer to the nearest penny.)

a. 8.9 percent compounded monthly for five years.

Present value               $

b. 6.6 percent compounded quarterly for eight years.

Present value               $ 

c. 4.3 percent compounded daily for four years.

Present value               $ 

d. 5.7 percent compounded continuously for three years.

Present value              

Question 3

Trigen Corp. management will invest cash flows of $331,000, $616,450, $212,775, $818,400, $1,239,644, and $1,617,848 in research and development over the next six years. If the appropriate interest rate is 6.75 percent, what is the future value of these investment cash flows six years from today? (Round answer to 2 decimal places, e.g. 15.25.)

Future value                $

Question 5

Barbara is considering investing in a stock and is aware that the return on that investment is particularly sensitive to how the economy is performing. Her analysis suggests that four states of the economy can affect the return on the investment. Using the table of returns and probabilities below, find

            Probability       Return

________________________________________

Boom  0.1       25.00%

Good   0.4       15.00%

Level   0.3       10.00%

Slump  0.2       -5.00%

________________________________________

What is the expected return on Barbara’s investment? (Round answer to 3 decimal places, e.g. 0.076.)

Expected return                       

Question 7      

The First Bank of Ellicott City has issued perpetual preferred stock with a $100 par value. The bank pays a quarterly dividend of $1.65 on this stock. What is the current price of this preferred stock given a required rate of return of 11.6 percent? (Round answer to 2 decimal places, e.g. 15.25.)

Current price               $