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H to present hint;  an acre the land rents for \$200 per year. If you desire to knife 8% on your investment, what is the value/price that land?
PROBLEM: A residence rents for \$5000 every month. If a comparable investments productivity 10% annually, just how much is the residence worth? (USE THE PERPETUITY FORMULA)
friend deposit \$400 in the financial institution earning 8% annually, whereby interest is compounded quarterly. After ~ 6 years what will be the finishing balance ? (calculate FV)
yearly compounding:PV = -\$400PMT = 0No. Of periods = n = 6 yearsI/y = 8%FV = ? (\$634.75) Compounded annuallyFV = \$450.46 quarterlyTo calculate quarterly =6 years X 4 soldier = 24 paymentsI/y = 8%/4 quarters = 2%ANSWER = \$643.37
The Shrieves Corp. Has actually \$10,000 that it plans come invest in marketable securities. It is choosing among AT&T bonds, which yield 7.5%, state of Florida mini bonds, which yield 5%, and AT&T desired stock, through a dividend productivity of 6%. Shrieves"s that company tax price is 35%, and 70% that the dividends got are tax exempt. Discover the after-tax returns on both securities.
Bond at&t = 7.5% (Before taxes yields)Flor. Muni = 5%T = .35AT&T Pref. Share = 6% (70% taxation exempt)ATY = (Before taxes yield)(1 – T)ATT bond = (7.5%)(1 - .35)= (7.5)(.65)= 4.88% ATYFlor. Muni = (5%)(1 – 0) = 5%Pref. Share = (6%)<1-(.3)(.35)>= (6%)(1 - .105)= (6%)(.895)= 5.37% - highest possible after tax yield from desired stock
3-2: Corporate bonds issued by Johnson Corporation currently yield 8%. Municipal bond of same risk right now yield 6%. In ~ what tax price would one investor be indifferent between these two bonds?
After taxation Yield (ATy) = (Before taxes yield, BTy)(1-T)(8%)(1-T) = (6%)(1-0) = 6%(.08(1-T) = .06.08 - .08T = .06-.08T = .06-.08-.08T = -.02T = .02/.08 = 25%
problem 6-2Assume the the risk-free rate is 6% and also the meant return on the sector is 13%. What is the required rate the return top top a share that has a beta of 0.7?
rRF = 6%rm = 13%b = 0.7ri = rRF + {(rm - rRF)(bi)>= 6% + (13% - 6%)(0.7)= 6% + (7%)(0.7)= 6% + 4.9%= 10.9% (ANSWER) lennythewonderdog.net has partnered with the national Tutoring association insurance claim your accessibility

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