For This or a Similar Paper Click Here To Order Now

Chapter 5: Problem 15

You decide to purchase a building for $30,000 by paying $5,000 down and assuming a $25,000 mortgage. The bank offers you a 15-year mortgage requiring annual end-of-year payments of $3,188 each. The bank also requires you to pay a 3 percent loan origination fee, which will reduce the effective amount the bank lends you. Compute the annual percentage rate of interest on this loan.

Chapter 5: Problem 20

Strikler, Inc. has issued a $10 million, 10-year bond issue. The bonds require Strikler to establish a sinking fund and make 10 equal, end of year deposits into the fund. These deposits will earn 8 percent annually, and the sinking fund should have enough accumulated in it at the end of 10 years to retire the bonds. What are the annual sinking fund payments?

Chapter 6: Problem 2

Recently the high and low market prices of Canadian Pacific Limited’s debentures (a $1,000 perpetual 4 percent bond) were $790 and $475, respectively. Determine the yield-to-maturity of one of these debentures if it was purchased under the following conditions:

At the high market price

At the low market price

Chapter 6: Problem 26

Disney Enterprises issues a 7.55 percent senior debentures (bonds) on July 15, 1993, with a 100-year maturity (that is, due on July 15, 2093). Suppose an investor purchased one of these bonds on July 15, 2003 for $1,050.

Determine the yield-to-maturity (nearest 1/100 of a 1 percent) using the valuation formula for a bond with a finite maturity. (Equation 6.5) {P0 = ( (PVIFAk, n) + M (PVIFx,.n)}

Determine the yield-to-maturity (nearest 1/100 of 1 percent) using the valuation formula for a perpetual bond. (Equation 6.8){p0= 1kd}

Explain why the answers to parts a and b are the same.