Finance 5000 Homework

FINC 5000 Homework Assignment for Week 4: Chapter 7: For Week 4, please turn in the answers to the following questions: 1. What are the two kinds of stock corporations issue to finance their assets? List the main characteristics of each. a. Common Stock : Common Stockholders are the owners of the company; they are entitled to any leftover income the company made in the form of dividends. b. Preferred Stock : Like common stockholders, preferred stockholder receive dividends, but preferred stockholders get paid first. Preferred Stockholders also don’t own a portion of the business like the common stockholder. They have a lower expected return since they are less risky stocks than common stocks because common stockholders may or may not get paid after everyone else was already paid. 2. (common stock valuation, constant growth) You’ve discovered a company that is expected to pay $2.25 dividend at the end of this year. The dividend is expected to grow forever at a constant rate of 4% a year. The required rate of return for this

Principle of FinanceWeek 5 Homework Assignment6.Determine the present values (PVs) if $5,000 is received in the future (i.e.,at the end of each indicated time period) in each of the following situations:a.5 percent for ten years 5000/(1+(0.05*10))=$3333.33b.7 percent for seven years 5000/(1+(0.07*7))=$3355.70c.9 percent for four years 5000/(1+(0.09*4))=$3676.479.Assume you are planning to invest $5,000 each year for six years and will earn 10 percent per year. Determine the future value (FV) of this annuity if your ±rst $5,000 is invested at the end of the ±rst year.(FV) (p*1.1)+5000 p=value of past year Year 1 $5,000.00 Year 2 $10,500.00 Year 3 $16,550.00 Year 4 $23,205.00 Year 5 $26,025.50 Year 6 $33,628.0510.Determine the present value (PV) now of an investment of $3,000 made one year from now and an additional $3,000 made two years from now if the annual discount rate is 4 percent.PV= $3000/(1.04) + $3000/(1.04)(1.04) PV= $3000/1.04 + $3000/1.0816 PV= $2884.62 + $2773.67 PV= $5658.2911.What is the present value (PV) of a loan that calls for the payment of $500 per year for six years if the discount rate is 10 percent and the ±rst payment will be made one year from now? How would your answer change if

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