Builtrite is planning to expand its stores into five other states and finance the expansion by issuing 18-year zero coupon bonds with a par value of $1,000.  If the current market rate for similar risk investments is 8%, what would you be willing to pay for these zero-coupon bonds?

Anna Conda is interested in investing $12,000, a gift from her grandparents, for the next five years in a mutual fund that will earn an annual return of 8 percent. What will her investment be worth at the end of four years? (Round to the nearest dollar.)

What annual return would you be earning if you were able to purchase a $1000 par, zero coupon bond for $625 that had 12 years until maturity?

Bob Katz is interested in the following stock: – current dividend is $2.50 – projected three year growth rate of 10% – growth rate after year 3 is expected to fall and remain constant at 6% – Bob’s required return is 12%   Step 1: Present value of Dividends  t Do FVIF Dt PVIF PVdiv 1 2 3   Step 2: Future value of stock price     Step 3: Present value of future stock price    Step 4: Present value of stock    Solving for step 4, what would Bob Katz be willing to pay (approximately) for the stock?

Beginning in 10 years, (end of years 10 to 12) you will receive 3 annual installments of $50,000 each. If interest rates are 6%, what are these benefits worth to you today?

Ally Gator has an IRA with a current balance of $22,500. Ally plans to continue depositing $5,000 annually into this account which earns 7%. After 40 years, what will the balance of Ally’s IRA be?

Jack Rabbit has saved $9,000 annually for the last 35 years in an account earning 9%. If Jack estimates that he will live for an additional 25 years, how much would he be able to start withdrawing annually for his retirement (9% interest)?

Bonds: Builtrite is planning on offering a $1000 par value, 20 year, 6% coupon bond with an expected selling price of $1025. Flotation costs would be $55 per bond.Preferred Stock: Builtrite could sell a $46 par value preferred with a 6% coupon for $38 a share. Flotation costs would be $6 a share.Common stock: Currently, the stock is selling for $62 a share and has paid a $4.82 dividend. Dividends are expected to continue growing at 11%. Flotation costs would be $3.75 a share and Builtrite has $350,000 in available retained earnings.Assume a 35% tax bracket. Their after-tax cost of new common is:

Jack Rabbit has saved $9,000 annually for the last 35 years in an account earning 8%. If Jack estimates that he will live for an additional 25 years, how much would he be able to start withdrawing annually for his retirement (8% interest)?

Interpret Liam’s z-score.