assorted questions solution 4 5 6 7 496173
Question 4
Trigen Corp. management will invest cash flows of $905,963, $529,350, $1,038,985, $818,400, $1,239,644, and $1,617,848 in research and development over the next six years. If the appropriate interest rate is 5.46 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
You wrote a piece of software that does a better job of allowing computers to network than any other program designed for this purpose. A large networking company wants to incorporate your software into their systems and is offering to pay you $466,000 today, plus $466,000 at the end of each of the following six years for permission to do this. If the appropriate interest rate is 7 percent, what is the present value of the cash flow stream that the company is offering you? (Round answer to the nearest whole dollar, e.g. 5,275.)
Present value $
Question 6
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 0.4 25.00%
Good 0.4 15.00%
Level 0.1 10.00%
Slump 0.1 -5.00%
________________________________________
What is the expected return on Barbara s investment? (Round answer to 3 decimal places, e.g. 0.076.)
Expected return
What is the standard deviation of the return on Barbara’s investment? (Round intermediate calculations and answer to 5 decimal places, e.g. 0.07680.)
Standard deviation
Question 7
Trevor Price bought 10-year bonds issued by Harvest Foods five years ago for $968.88. The bonds make semiannual coupon payments at a rate of 8.4 percent. If the current price of the bonds is $1,072.74, what is the yield that Trevor would earn by selling the bonds today? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.)
Effective annual yield
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