Purpose of AssignmentStudents should be able to calculate time value of money problems including solving for; present value, future value, rate and payment, determine the value and yield of corporate bonds, and use the dividend discount model to calculate the value and expected return of a common stock.Assignment Steps Resources: Tutorial help on Excel® and Word functions can be found on the Microsoft® Office website. There are also additional tutorials via the web that offer support for office products. Complete the following Questions and Problems from each chapter as indicated. Show all work and analysis. Prepare in Microsoft® Excel® or Word.

Ch. 5: Questions 3 & 4 (Question and Problems section): Microsoft® Excel® templates provided for Problems 3 and 4

Ch. 6: Questions 2 & 20 (Questions and Problems section)

Ch. 7: Questions 3 &11 (Questions and Problems section)

Ch. 8: Questions 1 & 6 (Questions and Problems section): Microsoft® Excel® template provided for Problem 6

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Chapter 8

Problems 4, 6, 7, 32

Input boxes in tan

Output boxes in yellow

Given data in blue

Calculations in red

Answers in green

NOTE: Some functions used in these spreadsheets may require that

the “Analysis ToolPak” or “Solver Add-In” be installed in Excel.

To install these, click on the Office button

then “Excel Options,” “Add-Ins” and select

“Go.” Check “Analyis ToolPak” and

“Solver Add-In,” then click “OK.”

Chapter 8

Question 6

Input area:

Stock price

Required return

Output area:

Next year’s dividend

$

–

Current dividend

$

–

Chapter 5

Problems 1, 2, 3, 4, 5

Input boxes in tan

Output boxes in yellow

Given data in blue

Calculations in red

Answers in green

NOTE: Some functions used in these spreadsheets may require that

the “Analysis ToolPak” or “Solver Add-In” be installed in Excel.

To install these, click on the Office button

then “Excel Options,” “Add-Ins” and select

“Go.” Check “Analyis ToolPak” and

“Solver Add-In,” then click “OK.”

Chapter 5

Question 3

Output area:

$

$

$

$

Present value

–

Input area:

Years

Interest rate

Future value

Chapter 5

Question 4

Input area:

Present value

Output area:

Years

Interest rate

#NUM!

#NUM!

#NUM!

#NUM!

Future value

QUESTIONS

2. Present Value and Multiple Cash Flows [LO1] Investment X offers to pay you $4,700 per year for

eight years, whereas Investment Y offers to pay you $6,700 per year for five years. Which of these cash

flow streams has the higher present value if the discount rate is 5 percent? If the discount rate is 15

percent?

20. Calculating Loan Payments [LO2, 4] You want to buy a new sports coupe for $79,500, and the

finance office at the dealership has quoted you an APR of 5.8 percent for a 60-month loan to buy the

car. What will your monthly payments be? What is the effective annual rate on this loan?

3. Valuing Bonds [LO2] Even though most corporate bonds in the United States make coupon

payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a

German company issues a bond with a par value of ?1,000, 23 years to maturity, and a coupon rate of

5.8 percent paid annually. If the yield to maturity is 4.7 percent, what is the current price of the bond?

11. Valuing Bonds [LO2] Union Local School District has a bond outstanding with a coupon rate of 3.7

percent paid semiannually and 16 years to maturity. The yield to maturity on this bond is 3.9 percent,

and the bond has a par value of $5,000. What is the price of the bond?

1. Stock Values [LO1] The Jackson?Timberlake Wardrobe Co. just paid a dividend of $1.95 per share on

its stock. The dividends are expected to grow at a constant rate of 4 percent per year indefinitely. If

investors require a return of 10.5 percent on The Jackson?Timberlake Wardrobe Co. stock, what is the

current price? What will the price be in three years? In 15 years?

…

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