ASSIGNMENT3

DR: Weal Shams El-Din

Submitted To: DR. Wael Shams EL-Din

Prepared By: Mohamed Sayed Fadl
Course: Financial Management
Group: E 66V
Assignment # : 3
ASSIGNMENT 3

Answer: -

Annual interest paid = 1000*8%= 80

Remaining to maturity = 12 years
interest = 9%
Pv = 80 * 7.16073 + 1000*0.35553 = 572.86 +355.53 = 928.39

Answer: -

interest = 8%
Remaining to maturity = 7 years
Annual interest paid = 1000*9%= 90
Pv = 90* 5.20637 + 1000* 0.58349 = 468.57+583.49 = 1052.06
Current yield = (90 /1052.06) * 100 = 8.55%
Answer: -

Market rate = 8.50% / 2 =4.25%

Years = 8* 2 =16
Interest rate paid semiannually = 1000*10% = 100 / 2 = 50
PV = 50* 11.4403+ 1000 * 0.51378 = 572.02+513.78=1085.80

Answer: -

A.
if interest 5%
PV –S = 100 * 0.95238 + 1000 * 0.95238 = 95.238 +952.38 =1047.62
PV- L = 100* 10.37966 + 1000* 0.48102 =1037.97+481.02=1518.98
If interest 12%
PV- L = 100* 6.81086+ 1000* 0.18270=681.09 +182.70 =863.78
PV –S = 100* 0.89286+ 1000 * 0.89286= 89.29 +892.86 =982.14
If interest 8%
PV- L = 100* 8.55948+ 1000* 0.31524=855.95+315.24=1171.19
PV –S = 100* 0.92593+ 1000 * 0.92593= 92.59 +925.93 =1018.52
 B. Due to that long term will have many changes along the years but for 1 year it
will not have many changes

Answer: -

PV =
1020 = PMT * 9.71507+ 1000 * 0.48566
1020 = 9.71507 PMT + 485.66
PMT =534.34 /9.71507 = 55
Current yield = 55 / 1020 =5.39%
= 5.39*2 = 10.78% annually