- You plan to deposit $1,000 in Year 1, $1,200 in Year 2 and $2,000 in year 4 in your savings account. You think that you can earn 6% per year. How much will you have in your account in Year 6?
- Bank X promises to pay you $5,200 per year for 8 years, whereas Bank Y offers to pay you $7,300 per year for 5 years.
a) Which of these cash flow streams has the higher present value (PV) if the discount rate is 5 percent?
(Hint: compare the PVs of annuity X ($5,200 per year for 8 years) with annuity B ($7,300 per year for 5 years)
b) Which one should you choose between Bank X and Bank Y?
- Today, Dinero Bank offers you a $60,000, five-year term loan at 7.5 percent annual interest (APR). What will your annual loan payment be? (Hint: Find PMT)
- You buy an annuity that will pay you $24,000 a year for 25 years. The payments are paid on the first day of each year. What is the value of this annuity today if the discount rate is 8.5 percent? (Hint: annuity due)
- The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $30,000 per year forever. If the required return on this investment is 4.3 percent, how much will you pay for the policy? (Hint: Find PV of perpetuity)
- Find the EAR in each of the following cases:
a. APR 9% with quarterly compounding
b. APR 18% with monthly compounding
c. APR 14% with semi-annual compounding
- Find the APR, or stated rate, in each of the following cases:
a. EAR 11.5%, semi-annual compounding
b. EAR 12% with quarterly compounding
- Consider a 3-year bond with a face value of $1,000 that has a coupon rate of 7%, with semi-annual payments.
a. What is the dollar amount of each coupon from this bond?
b. How many times of coupon payments will be made to the maturity?
- Assume that a bond will make coupon payments every six months as shown on the following timeline:
a. What is the coupon rate (in percent)?
b. What is the face value?
- What is the bond price of $1,000 bond with 6% coupon rate, annual coupons, and 2 years to maturity if the YTM is 8%?
- What is the bond price of $1,000 bond with 6% coupon rate, semi-annual coupons, and 2 years to maturity if the YTM is 8%?
- Suppose a 10-year, $1000 bond with an 8% coupon rate and annual coupons is sold for $1034.74.
a. What is the bond’s YTM?
b. Is the YTM higher or lower than the coupon rate?
t was referenced before that LEGO GROUP had around 11,000 providers, which was double the number that Boeing used to manufacture its flying machine. Such wastefulness and resoluteness was before long perceived and consideration was coordinated to the production network, which was 10 years obsolete. Besides, low quality client care and item accessibility diminished the estimation of organization's establishment. Jørgen Vig Knudstorp, recently selected CEO, expressed: "From my point of view, the store network is an organization's flow framework. You need to fix it to keep the blood streaming." (M. M. Larsen et al. 2010; K. Oliver et al. 2007) It was recognized that taking care of issues identified with worldwide store network could fabricate a solid base for significant changes in the association. This could likewise be the required advance forward towards cost-viability and an improved plan of action. Be that as it may, such huge changes are difficult to actualize and exhibited noteworthy difficulties for LEGO Group Change of production network the executives LEGO Group chose to streamline their inventory network so as to manage the most huge emergency in the organization's history. LEGO understood that it was hauling behind retail monsters, for example, Wal-Mart and Carrefour. These organizations had put colossal measures of recourses into advanced and effective inventory network the executives frameworks. LEGO Group began losing the challenge to organizations, which streamlined their expenses and gave in the nick of time administrations to its clients (K. Oliver et al. 2007). Changing such a massive and complex production network just as evacuating the wasteful aspects was a difficult objective. Remember that by 2004 organization had around 7000 representatives working predominantly in two processing plants and three bundling focuses, situated in various nations. Further issues and changes inside various regions of store network the executives will be examined, including item advancement, appropriation and assembling. Item advancement Item advancement and development was critical for LEGO as it exhibited the center of what this organization was extremely about. Changes in this field were hard to execute. This was to some extent in light of its fragile nature and inside opposition from representatives. LEGO's improvement lab called "Kitchen" was consistently creating new inventive items and thoughts. In any case, the board understood that new items were returning less benefit and cost more to deliver. Engineers and architects did not represent creation and store network issues, in their structures. Thusly, the assortment of different segments and highlights just as item multifaceted nature wound up overpowering and began to cause serious issues in assembling and conveyance. LEGO blocks and different components came in excess of 100 shading tones. LEGO sets turned out to be progressively intricate with a large number of various figures. (M. M. Larsen et al. 2010; K. Oliver et al. 2007) Such cost ineffectual innovativeness caused issues like huge stocks. This was a result of regular interest variances and short conveyance times. In addition, huge measure of segments and items required huge interests in molds, while only 30 items produced 80 percent of organization's deals. In this manner, LEGO chose to definitely chop down the quantity of segments and highlights. This diminished expenses in the store network and made a superior open door for generation redistributing. The board updated various day by day arrangements so as to cut the expenses, disentangle creation and kill wasteful aspects. The palette was diminished to around 50 hues. A noteworthy decrease in assortment of privateers, cops and different figures was suggested also. Besides, tar sourcing examines cut its sap expenses down the middle and lessen provider number by 80 percent. All the while, LEGO Gro>GET ANSWER