Finance Assignment A1

Unit 2 Textbook Problems 

This assignment helps you develop the skills to master the following course competencies:

o Apply the theories, models, and practices of finance to the financial management of the firm. 

Activity Instruction 

To enhance your understanding of financial concepts, please complete the following problems in your Corporate Finance textbook.

o Chapter 4, problem 2a, b, and c (pages 118). 

o Chapter 4, problem 3 (page 118). 

o Chapter 4, problem 4 (page 118). 

o Chapter 4, problem 5 (page 118). 

o Chapter 4, problem 11 (page 119: Machine Co.). 

o Chapter 5, problem 2a (page 159). 

o Chapter 5, problem 3 (page 159). 

o Chapter 6, problem 2 (page 190). 

o Chapter 6, problem 4 (page 190).

You are required to use the textbook problems template in the Resources to complete the problems. This Excel document contains unique details and cells specific to the problems that you must use to derive your solutions. Provide full detail of the process used to reach the solution.

Unit 2 Textbook Problems Scoring Guide

Due Date:Unit 2
Percentage of Course Grade: 5%.

ACTIVITY WEIGHTING

Calculate future values of an amount at differing interest rates and time.

10%

Calculate present values for differing future values, time, and interest rates. 10%

Calculate interest rates for differing present values, time, and future values. 10%

Calculate the number of periods for differing present values, interest rates, and future
values.

10%

Calculate the present value of differing cash flows at 5%, 13%, and 18%. 20%

Calculate the price of a bond multiplied by 10 with a YTM of 7%. 10%

Calculate the YTM for bonds. 10%

Calculate the required return for stock. 10%

Calculate the stock price for a required return on investment. 10%

Page 1 of 1Unit 2 Textbook Problems Scoring Guide

7/17/2018https://courserooma.capella.edu/bbcswebdav/institution/MBA/MBA6016/180700/Scoring_Guides…

UNIT 2- TEXTBOOK PROBLEMS

esent Value

,550

3,550 3,550

6%

10

=

A. B. C.

Future Value =

4

Interest Rate

%

Number of Years 9

16

A. B. C. D.

Present Value =

Future Value

Number of Years 3 10 16

Interest Rate

A. B. C. D.

Present Value =

Future Value

Interest Rate 6%

7%

$585 $585

$815 $815

$1,630 $1,630

$2,140 $2,140

A.
Rate

Settlement (Think of Settlement as the beginning of the duration of the bond)
Maturity (Think of Maturity as the end of the duration of the bond)
Rate (Coupon Rate)

Pr

Redemption

Frequency (Coupon payments are semiannual, so you put in a 2. If they are annual, then you input a 1)

(Always leave it blank)

YTM

Payment

Dividend

11%

																							UNIT 2: TEXTBOOK PROBLEMS
CHAPTER 4: PROBLEM 2 (a thru c)
				A.				B.				C.
	Pr				3
			Interest		Rate			6%	8%
		Number of Years			10	20
			Future Value
CHAPTER 4: PROBLEM 3
		D.
15,451	51,557	886,073	550,		16
	7%		9	14%		11%
13	24
		Present Value =
CHAPTER 4: PROBLEM 4
217	432	41,000	54,382
293	1053	162,181	483,500
19
CHAPTER 4: PROBLEM 5
625	810	18,400	21,500
1,284	4,341	234,162	215,000
9%	10%
Number of Years (or Periods)
CHAPTER 4: PROBLEM 11
Discount Rate	5%	13%	18%
Year 1:			$585
Year 2:			$815
Year 3:			$1,630
Year 4:			$2,140
Present Value @ 5%, 13%, and 18% =	(Note: Use the built-in NPV formula in Excel)
CHAPTER 5: PROBLEM 2
	Settlement		(Think of Settlement as the beginning of the duration of the bond)
	Maturity		(Think of Maturity as the end of the duration of the bond)
	(Coupon Rate)
	YTM	(Yield to Maturity or Required Rate of Return)
	Redemption	(Bonds Face Value, Par Value, or Fair Price; Note that is $100, not $1,000. You make the adjustments by multiplying the answer by 10)
	Frequency		(Coupon payments are semiannual, so you put in a 2. If they are annual, then you input a 1)
Basis		(Always leave it blank)
Bond Price	(The answer. But you need to multiply it by 10 to get the actual bond price)
Multiply by 10	(Microsoft gives the bond price in 2 digits. You need to multiply it by 10 to get the actual bond price)
CHAPTER 5: PROBLEM 3
(The bonds price per $100 face value)
(Bonds Face Value, Par Value, or Fair Price; Note that is $100, not $1,000)
Basis:
CHAPTER 6: PROBLEM 2
	Dividend	$2.14
Dividend Growth Rate	4.40%
ZYX Stock Price	$32
Required Return =
CHAPTER 6: PROBLEM 4
$3.08
Dividend increase per year	4.60%
Required Return (Return on Investment)
Stock Price =