1) An initial investment of $400,000 is expected to produce an end-of-year cash flow of $480,000. What is the NPV of the

[answerhappygod]

1) An initial investment of $400,000 is expected to produce an
end-of-year cash flow of $480,000. What is the NPV of the project
at a discount rate of 20 percent?
0
2) For $10,000, you can purchase a five-year annuity that will
pay $2,504.57 per year for five years. The payments begin one year
from now. Calculate the effective annual interest rate this annuity
will pay.
8%
3) The following are the yields to maturity of zero-coupon
bonds.
1-year YTM = 2.50%
2-year YTM = 3.00%
A 2-year bond with annual coupons, with coupon rate 5% and face
value $1,000 is quoted in the market at par, that is, the quoted
price is $1,000.
What is the profit you can achieve with a long-short arbitrage
strategy? (You can only buy/sell one bond of each).
38,51$
4) You are given the following spot rates:
1-year spot rate S0,1 = 4%
2-year spot rate S0,2 = 4.5%
3-year spot rate S0,3 = 5.5%
4-year spot rate S0,4 = 7%
Calculate the forward rate from year 2 to year 4
(F2,4).
9,56%
5) Given a monthly rate of 1.1%, what is the Effective Annual
Rate (EAR)?
14,03%