StudentShare solutions
Triangle menu

Finance and Investment assignemnt 1 - Assignment Example

Nobody downloaded yet

Extract of sample
Finance and Investment assignemnt 1

FV W/ Cont. Compounding =PV*e^rt Where: PV= Present Value R= Rate T= Time (i) Annually FV= $ 1,000*e^(.45)(1) $ 1,046.00 (ii) 6 monthly FV= $ 1,000*e^(.45/2)(1*2) $1,046.00 (iii) Quarterly FV= $ 1,000*e^(.45/4)(1*4) $1,046.00 (iv) Monthly FV= $ 1,000*e^(.45/12)(1*12) $1,046.00 (v) Daily FV= $ 1,000*e^(.45/365)(1*365) $1,046.00 (vi) Hourly FV= $ 1,000*e^(.45/8760)(1*8760) $1,046 (c) Effective interest rate tries to determine the entire cost of borrowing. It accounts for the effect compounding interest which is excluded from the stated or nominal interest rate. For instance, a loan with 10% interest compounded monthly will actually have a rate greater than 10% since the rate is accumulated on monthly basis. Effective Rate, R=(1+I/N)^N Where: R- Effective Rate I= Stated Interest Rate N=Number of compounding periods per year (i) Annually The effective annual interest rate is similar to compounded rate since number of compounding period is one. (ii) 6 monthly R=(1+0.045/2)^2 1.0225% 2.2500% (iii) quarterly R=(1+0.045/4)^4 1.0341% 3.4100% (iv) Monthly R=(1+0.045/12)^12 1.0420% 4.2000% (v) Daily R=(1+0.045/365)^365 1.0459 4.5900% (vi) Hourly R=(1+0.045/8,760)^8,760 1.0460 4.6000% (d) R=e^n R=2.718^0.045 = 4.6000% Question 4 (a) F.V = P.V (((1+r))^n-1)/r) Where: FV – Future Value PV-Present Value R- Interest Rate N= Time taken 2,000= 1000(((1+2%)^n-1))/.02) 2,000=1,000(1.02)^n-1/.02 (1.02)^n-1=(2000/1000)*.02 (1.02)^n-1=0.04 (1.02)^n=0.04 Nlog 1.02=1.04 N=1.04/In1.02 N=1.04/0.0198 N=52.5 Years (b) 2,000= 1000(((1+5%)^n-1))/.05) 2,000=1,000(1.05)^n-1/.05 (1.05)^n-1=(2000/1000)*.05 (1.05)^n-1=0.1 (1.05)^n=0.1 Nlog 1.05=1.1 N=1.1/In1.05 N=1.1/0.0488 N=22.54 Years (c) 2,000= 1000(((1+7%)^n-1))/.07) 2,000=1,000(1.07)^n-1/.07 (1.07)^n-1=(2000/1000)*.057 (1.07)^n-1=0.14 (1.07)^n=0.14 Nlog 1.07=1.14 N=1.14/In1.07 N=1.14/0.0677 n-16.85 (d) i=2, i=5 and i=7. (5 marks) F.V = P.V (((1+i/2))^0.5d-1)/i*2) (1+0.5i)^0.5d-1=(FV/PV)i*2 (1+0.5i)^0.5d = (FV/PV)i*2+1 d *0.5e^(1+0.5i)=(FV/PV)i*2+1 d = (FV/PV)i*2+1 0.5e(1+0.5i) Illustration: D= (2000/1000)*2*2+1 (0.5*2.718*(1+0.5*0.02) =9/2.269 =3.967 or 4% D= (2000/1000)*2*5+1 (0.5*2.718*(1+0.5*0.05) =21/2.09 =10.05 or 10% D= (2000/1000)*2*7+1 (0.5*2.718*(1+0.5*0.07) =29/2.07 =14% (e) F.V = P.V (((1+i/2))^0.25d-1)/i*4) (1+0.25i)^0.25d-1=(FV/PV)i*4 (1+0.25i)^0.25d = (FV/PV)i*4+1 d *0.25e^(1+0.25i)=(FV/PV)i*4+1 d = (FV/PV)i*4+1 0.25e(1+0.25i) Question 5 Global Financial Crisis (GFC) with explanation of securitization and discussion on the role it played in the beginning of the GFC. Global financial crisis is about the failure of global major financial institutions. The global financial crisis originated form in the United States (US) when investors lost confidence in mortgages ...Show more


Bank 2005 Finance and Investment Name: Course: Professor: Institution: City and State: Date: Question 1 (a) The assessable capital gain Gross capital gain= $ 15,000- $ 10,000 $ 5,000 (b) Net assessable capital gain Net assessable capital gain= Gross capital gain- Transaction costs-capital losses brought forward Net assessable capital gain=$ 5,000-0 $5,000 (c) Medicare Levy=1.5% Capital gain tax= (45-1.5)%*&5,000 $2,175 Question 2 (a) Taxable Income Tax Rate $0-$ 18,200 0% $18,201-$37,000 19% $37,001-$80,000 32.5% $80,001-$180,000 37% Over $ 180,000 45% (b) Taxable Income Tax at applicable rates Net Pay $19,000 3,610 15,390 $37,000 7,030 29,970 $ 60,000 19,500 40,500 $100,000 37,000 63,000 $ 1…
Author : tierrahilll
Finance and Investment assignemnt 1
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the assignment on your topic
"Finance and Investment assignemnt 1"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

However, it cannot be used for specific projects because each project has it own operating risk. b) Book weights should be used to calculate WACC because the market value is subjective and changes regularly. c) Current (marginal) cost rates should be used because WACC is used mainly to make investment decisions and these decisions depend on expected future cash flow from projects in relation to the cost of new capital.
2 pages (500 words) Assignment
In an organization the ability to repay the contractual obligations can be accessed through the Balance sheet, which is a statement of Assets and Liabilities of the firm as on a particular date. The Balance Sheet clearly shows the liquidity of the intermediary firm to meet its obligations.
9 pages (2250 words) Assignment
E-Payment Systems Assignemnt
Majority of the early adapters got hugely benefitted for its inclusion. Earlier E-commerce was considered to be a core competency for the organizations however at present it has been a necessity in order to survive in the market place. The report will highlight on the different existing methods of online payment and will try to explain the pros and cons of the methods.
5 pages (1250 words) Assignment
Corporate finance - WACC - Cash Flow - Measuring Return on Investment - discounted cash flow techniques - Financing Decisions -
The following discussion entails the significance of all three approaches: A. ACCOUNTING EARNINGS VERSUS CASH FLOWS One of the most fundamental approaches in understanding and analyzing the return on investments is to see whether ROI should be analyzed based on accounting earnings or cash flows.
19 pages (4750 words) Assignment
In order to conduct my comparison I will be comparing the figure for 2012 with 2011’s figures. As the UK supermarket sector standings show it is Tesco who have had the advantage over its competitors for the last decade (30.4% share, 3.3% sales rise in 2012) although in recent years this position is beginning to look less unassailable.
8 pages (2000 words) Assignment
If we never sell more than $1000000, the business will still be worth pursuing. The break even point would still be reached in this case and therefore, any sales below that would still do but not lower than $970000. In case, in order to stay on
3 pages (750 words) Assignment
Disucssion Question 1 week 2 Investment Information
The capacity to create cash flow in terms of profits is the backbone of a company and the basis for its fundamental value (Brigham & Ehrhardt, 2011). Thus an investor should choose to invest his or her financial
1 pages (250 words) Assignment
Buying stock on margin simply means borrowing money from the brokerage and using them to purchase assets. The money borrowed will be later refunded with the additional interest. It is also similar to buying goods or
4 pages (1000 words) Assignment
Case Project Assignemnt
According to Dennis Technology Labs (2013), Kaspersky Antivirus has a detection accuracy rating of 97%. The detection rate considers how the antivirus differentiates malware from legitimate applications. Kaspersky Antivirus is also the best in terms of preventing threats from
2 pages (500 words) Assignment
Investment Finance-II Assignment
The correlation and covariance of stock returns of AMP and QBE helped to determine the amount that the investor can expect by investing in these assets. The changes in value of one asset are compared to another. The correlation between AMP and QBE is less than 1 which signifies that changes in value of one will not affect the other stock. In other words, if the stocks of AMP are low, then its effects will be nullified by increase in stocks of QBE.
11 pages (2750 words) Assignment
Comments (0)
Click to create a comment
Let us find you another Assignment on topic Finance and Investment assignemnt 1 for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
Join us:
Contact Us