Mid Term Exam Essay

Submitted By annogge
Words: 1038
Pages: 5
Open Document
BUSI 640 Midterm Exam
Spring 2015
NAME: _____________________
I pledge on my honor that I have not given or received any unauthorized assistance on this examination.
Signature: _I pledge on my honor that I have not given or received any unauthorized assistance on this examination. ____________________________________________ Please note:
One you access the exam on Canvas, you have 180 minutes to complete the exam.
Please make sure you post your completed exam before the three hour deadline. No late submissions will be accepted.
Q 1, 3, 6, and 7 are each worth 15 points while the remaining four questions are worth 10 points each.
Partial credit will be allocated, so show all of your work. 1. Jennifer Gage is trying to decide between a traditional fixed-rate 30 year versus 15year mortgage to fund the purchase of an investment property. The current interest rates for a 30 year mortgage are 4.25% APR based on monthly compounding while the 15 year mortgage is available at 4.0% APR based on monthly compounding. Jennifer is planning to borrow $500,000 and the first monthly payment is due in exactly one month’s time. In order to help Jennifer make her decision, using the information provided above, estimate the following:
a) Jennifer’s monthly mortgage payment for the 15 year and 30 year mortgage.
ANSWER: Using financial calculator, Jennifer 15 year mortgage is $3,698.44 while 30 year mortgage is $2,459.70

b) The total interest she would have to pay over the life of the loan for the 15 year versus 30 year mortgage.
ANSWER: Using financial calculator, Total interest for 15 years is $165,719.13 while total interest for 30 years is $385,491.80

c) Calculate the balance on her loan at the end of 15 years with the 30 year mortgage.
ANSWER: Using financial calculator, Balance on loan is $326,966.64

d) If Jennifer would like to keep her monthly mortgage payment the same as in the 30 year mortgage but borrow using the 15 year mortgage, what is the maximum amount she can borrow?
Using financial calculator, Maximum she can borrow is $332,532.13 2. You are considering purchasing a zero percent coupon bond that is about to be issued by XYZ Inc. It has a face value of $1000 and five years to maturity. The nominal yield on this bond is 7.5% compounded semi-annually. What is the price of this bond?

ANSWER: USING FINANCIAL CALCULATOR, PRICE OF BOND IS $692.02 3. Grandflow Inc. has just made a dividend payment of $1.5 per share and is expected to pay a dividend of $2 per share next year. Further, the dividend is expected to grow for the following 2 years at the rate of 10% per year. Beyond year 3, the dividend is expected to grow at a constant rate of 3% forever. Dividends are paid out at the end of each year. If Grandflow’s cost of equity is 15%, what is the current value of a share of Grandflow stock?

ANSWER: USING FINANCIAL CALCULATOR, CURRENT VALUE OF A SHARE IS $18.65 4. Roy's Welding Supplies common stock sells for $38 a share and pays an annual dividend that increases by 3 percent annually. The required rate of return on this stock is 8.0 percent. What is the amount of the last dividend paid?
ANSWER: USING FINANCIAL CALCULATOR, AMOUNT OF DIVIDEND LAST PAID IS $1.84 5. You are in possession of a growing annuity that makes its first payment of $15 sixteen years from now. Beyond year 16, the payment of $15 will grow at 4% per year until year 30 when the payment stops. If the annual interest rate is 8%, what is the value of this annuity today?
USING FINANCIAL CALCULATOR, VALUE OF ANNUITY TODAY IS $153.91 6. A fast growing biotechnology company has just received a 15 year patent for a new drug. The company expects that next year the profits will be 100 million and are expected to grow at the rate of 7% per year over the next 15 years. The company plans to discontinue producing the drug at the end of 15 years when the patent expires. What is the present value of the cash flows
Show More

Related Documents: Mid Term Exam Essay

Mat 540 Mid Term Exam Essay

5/8/2015 Quantitative Methods Mid term Question 1 Deterministic techniques | Maggie Moore ­ Academia.edu  Search... Log In Sign Up Quantitative Methods Mid term Question 1 Deterministic techniques Quantitative Methods Mid term Question 1 Deterministic techniques assume that no uncertainty exists in model parameters. Selected Answer: True Question 2 An inspector correctly identifies defective products 90% of the time. For the next 10 products, the probability that he makes fewer than 2 incorrect…

Words 1220 - Pages 5

Mid-Term Exam Busn 379 Essay examples

Correct: Multiple Choice 31 29 Many Multiple Choice 1 0 Short 4 N/A Grade Details - All Questions Page: 1 2 3 1. Question : (TCO 1) What is the goal of financial management for a sole proprietorship? Student Answer: Decrease long-term debt to reduce the risk to the owner maximize net income given the resources of the firm CORRECT maximize the market value of the equity minimize the tax impact on the proprietor minimize costs and increase production Instructor…

Words 1351 - Pages 6

Course Outline Essay

emails use CANVAS Week Topics chpt Practice Questions Ungraded 1 Jan 6/8 Investment environment Markets and instruments 1 2 2-2, 2-6, 2-7, 2-11, 2-13 2 Jan 13/15 Trading on securities 3 3-2, 3-17, 3-23 3 Jan 20/22 Bond Prices and Yields Term Structure of Interest rates 12 13 12-6, 12-13, 12-33 13-24, 13-15,13-29(a) 4 Jan 27/29 Managing Bond Portfolios In class quiz (week 1-3 inclusive) 14 14-4, 14-24, 14-14, 14-18 5 Feb 3/5 Security analysis 16 16-8, 16-26, 16-16, 16-31 Reading Week…

Words 925 - Pages 4

Intermediate Microeconomic Theory I (Fall 2014)

Information on Midterm Exam #2 AP/ECON2300A – Intermediate Microeconomic Theory I (Fall 2014) Instructor: Prof. Xueda Song October 26, 2014 1. The mid-term exam #2 will be held at 10-11:25am (85 minutes) on November 6, 2014, Thursday, at ACW006 (our regular classroom). Please arrive by 9:50am. 2. You must bring a photo ID to the exam. You will be required to sign your name on the class list at the beginning of the exam. You do not need to sign out. 3. Please bring pencil, pen, ruler, eraser, and…

Words 614 - Pages 3

Requirement Of Computer With Computer Application

S300T Exams Open book and open note. You must take the exam on the official day at the official time (NO EXCEPTIONS). Bring a calculator. NO smartphones are allowed under any circumstance. If this is your only calculator, borrow or purchase a regular calculator. • Regrades o You must write your entire exam in ink to…

Words 2754 - Pages 12

HTML SAMPLE Essay

acknowledgement submitting someone elses work, in whatever form without acknowledgement knowingly representing as ones own work any idea of another. Examples of other academic offences include cheating on exams, tests, assignments or reports impersonating somebody at a test or exam obtaining an exam, test or other course materials through theft, collusion, purchase or other improper manner submitting course work that is identical or substantially similar to work that has been submitted for another course…

Words 2752 - Pages 12

Syllabus: Period 5 Element and Session Essay

technological forces buffeting the firm  to identify the capabilities that the firm must acquire/develop D. Course Requirements and Grading Your grade in this course will depend on 4 components:  Case Analysis (20%)  Mid Term Exam (20%)  Group Presentation (20%)  Final Exam (40%) Case Analysis (20%) We will discuss several cases over the course of this quarter. You are required to submit a write-up for 4 case write-ups:  Case write-ups are to be submitted in groups  Your write-up should…

Words 1420 - Pages 6

Essay about Course Outline Fall 2014

Communication in Organizations Organizational Culture Organizational Structure and Design Grading: 5% Classroom Contributions 10% Individual Presentation & Paper 10% Quizzes (5% for each) 10% Case Presentation 5% Written Assignment 25% Midterm Exam 35% Final Exam Attendance: As per Fraser International College policies, attendance in class is mandatory. Students who do not attend the first class of the semester will not be able to remain in the course, except in extenuating circumstances that are…

Words 1934 - Pages 8

Syllabus: Supply Chain and Web Site Essay

chain topics. The second will be five in-class quizzes, which will be on the material covered during the weeks preceding each quiz. The third component will be in-class case study presentations. The fourth component will consist of two mid term exams, and one final exam. NOTE: The quizzes will be administered using Turning Technologies response cards (aka “clickers”), details of which will be posted on my web site. These devices are obtainable either at the book store on campus, or directly from Turning…

Words 2123 - Pages 9

Essay about Soc 120 Intro Syl Spring 2015

points made in class. You may drop the lowest quiz grade. Your average on these four quizzes will constitute 1/3 of your course grade. 2. Exams: There are also two exams: a mid-term and a final. Exams are composed of multiple choice, short answer, and essay questions. Each is worth 1/3 of your course grade, and each is comprehensive. That is, the mid-term covers all material discussed since the beginning of the semester, as does the final. 3. Exercises: There are a series of two exercises that…

Words 1220 - Pages 5