**Compute the discount rate.**

1. J Lo Enterprise is planning a major expansion for four years from today. In preparation for this, the company is setting aside $35,000 each quarter, starting today, for the next four years. How much money will the firm have when it is ready to expand if it can earn an average of 6.25 percent, compounded quarterly, on its savings?

2. You want to purchase a new condominium that costs $329,000. Your plan is to pay 20 percent down in cash and finance the balance over 25 years at 6.25 percent. What will be your monthly mortgage payment?

3.Randy Moss wants to save for a trip to Canton, Ohio. He will need $12,000 at the end of four years. He can invest a certain amount at the beginning of each of the next four years in a bank account that will pay him 6.8 percent annually. How much will he have to invest annually to reach his target?

The Robinson Corporation has $43 million of bonds outstanding that were issued at a coupon rate of 12.550 percent seven years ago. Interest rates have fallen to 11.750 percent. Mr. Brooks, the Vice-President of Finance, does not expect rates to fall any further. The bonds have 17 years left to maturity, and Mr. Brooks would like to refund the bonds with a new issue of equal amount also having 17 years to maturity. The Robinson Corporation has a tax rate of 30 percent. The underwriting cost on the old issue was 4.30 percent of the total bond value. The underwriting cost on the new issue will be 2.60 percent of the total bond value. The original bond indenture contained a five-year protection against a call, with a call premium of 6 percent starting in the sixth year and scheduled to decline by one-half percent each year thereafter. (Consider the bond to be seven years old for purposes of computing the premium.) Use Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Assume the discount rate is equal to the after-tax cost of new debt rounded up to the nearest whole percent (e.g. 4.06 percent should be rounded up to 5 percent)

a. Compute the discount rate. **(Do not round intermediate calculations. Input your answer as a percent rounded up to the nearest whole percent.)**

**Compute the discount rate.**

*Compute the discount rate.*

Compute the discount rate.

**Compute the discount rate.**

*Compute the discount rate.*

Compute the discount rate.

**Compute the discount rate.**

*Compute the discount rate.*

Compute the discount rate.

**Compute the discount rate.**

*Compute the discount rate.*

Compute the discount rate.

**Compute the discount rate.**

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