1. you take out a 15-year loan in the amount of $400,000 at a 3.6

1. You take out a 15-year loan in the amount of $400,000 at a 3.6 perpent rate annually.  The loan is to be paid off by equal monthly installments over 15 years.  Draw an amonmionWe the beginning balance,  total payment,  principal repayment,  interest payment and ending balance for month.  How much is the total interest payment for the five months? (show only five months on the table

2.  Sheel Inc.  has 7 percent coupon(compounded semiannually)  bonds on the market with 10 years to maturity,  and the par value of $1,000.  At what price should the bonds be selling for if YTMis 5%?  Had the bond been selling at $989.00,  what would be the YTM(assuming the same coupon.  maturity and par value)?  Based on your answers above,  what is the relationship between YTM and bond price? 

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3.  Using the proper methods answer A and B :


A. You have just joined the investment banking firm of Dewey.  Cheatum,  and Howe.  They have offered you two different salary arrangements.  You can have $85.000 per year for the nextwo years,  OR you can have $80.000 first year.  $75,000 second year,  along with a S20,000 signing bonus today.  The bonus is paid immediately,  and the salary is paid at the end of each year.  If the market interest rate is 4 percent,  which do you prefer?

B.  You are given the following cash flow information.  The appropriate discount rate is 6 percent for Years 1-4 and 11 percent for Years 5-10.  Payments are received at the end of each year.  Year Amount $35,000 1-4 5-10 $40,000 What is the present value of the income stream above?


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