Investment 10000

Years Rate Frequency

1 3.25% Annual
2 3.25% Annual
3 3.25% Annual
4 3.25% Annual
5 3.25% Annual

1
accumulated value $ 11,734 =FV(B4,A8,,-B1)

2
The results are ex post as the figure is based on actual results rather than forecast.
B
Years Rate Frequency
1 3.25% Semi-annual
2 3.25% Semi-annual
3 3.25% Semi-annual
4 3.25% Semi-annual
5 3.25% Semi-annual

3
Accumulated Value $11,749.13 =FV(B17/2,A21*2,,-B1)

C
Years Rate Frequency Accumulated Value
1 3.25% Annual $10,325.00
2 3.25% Semi-annual $10,663.29
3 3.25% Quaterly $11,014.09
4 3.25% Monthly $11,377.43
5 3.25% Annual $11,747.20

4
Accumulated Value $11,747.20 =D32

d
Years Rate Frequency Accumulated Value
1 3.25% Annual $10,325.00
2 4.00% Semi-annual $10,742.13
3 4.00% Quaterly $11,178.30
4 4.00% Monthly $11,633.72
5 5.00% Annual $12,215.41

5
Accumulated Value $12,215.41 =D43

E
Years Rate Frequency
1 3.25% Annual
2 3.25% Annual
3 3.25% Annual
4 3.25% Annual
5 3.25% Annual
Initial Investment 10,000
Per Year Investment 4,000
6
accumulated value $ 33,077 =FV(B50,A54,-B56,-B55)

F
Years Rate Frequency Accumulated Value
1 3.25% Annual $10,325.00
2 4.00% Semi-annual $14,742.13
3 4.00% Quaterly $19,340.72
4 4.00% Monthly $24,128.69
5 5.00% Annual $29,335.12

Initial Investment 10,000

Per Year Investment 4,000

7
Accumulated Value $29,335.12

G
Total Price $ 50,000
Down Payment $ 15,000

a
rate 4.95%
term (years) 5
PMT $3,993.89 =PMT(B79/2,B80*2,-B75+B76)

b
rate 5.25%
term (years) 5
PMT $4,024.93 =PMT(B84/2,B85*2,-B80+B81)

Opening Balance Installment Interest

1 $ 35,000 $3,993.89 $ 866.25
2 $ 31,872.36 $3,993.89 $ 788.84
3 $ 28,667.31 $3,993.89 $ 709.52
4 $ 25,382.93 $3,993.89 $ 628.23
5 $ 22,017.26 $3,993.89 $ 544.93
6 $ 18,568.30 $3,993.89 $ 459.57
 7 $ 15,033.97 $3,993.89 $ 372.09
8 $ 11,412.17 $3,993.89 $ 282.45
9 $ 7,700.73 $3,993.89 $ 190.59
10 $ 3,897.43 $3,993.89 $ 96.46

Part C
Father's Loan $ 20,000.00
Repayment $ 30,000.00

Thunder loan 20000

APR 6.50% Semi annual
Lending Rate 3%

points 350

a
Prime Lending Rate is the lending rate that is applicable in numerous countries. It is
the rate that is given as a favor to customers or the customers with a high customer
ranking

b
Rate of Return 8.45% =RATE(5,,-B104,B105)

c
Rate of Return 6.61%

Part D

Age (current) 22
Age (target) 30

Savings 25%
Value 300000
savings 75000

Present Savings 15000

Interest Rate 4%
FV 75000

Term Years 41 =NPER(B138/2,,-B133,B139)/2

b
Interest Rate 10%
FV 75000

Term Years 17 =NPER(B144,,-B133,B145)

c
Rate of Return 22.28% =RATE(8,,-B133,B131)

d
term 8
rate 4%

FV $28,094.72 =FV(B154,B153*2,,-B133)

No the goal by this rate is not acceptable

e
rate 4%
PV 15000
FV 75000

alternative 1 term
term 20.52
FV $75,000.00 =FV(B161,B166*2,,-B162)

Alternative 2 PMT
Term 8
PMT $ 2,149.20
FV $75,000.00 =FV(B161,B170*2,-B171,-B162)
=FV(B28,1,,-B1)
=FV(B29/2,2,,-D28)
=FV(B30/4,4,,-D29)
=FV(B31/12,12,,-D30)
=FV(B32,1,,-D31)

=FV(B39,1,,-B1)
=FV(B40/2,2,,-D39)
=FV(B41/4,4,,-D40)
=FV(B42/12,12,,-D41)
=FV(B43,1,,-D42)
=FV(B62,1,,-B68)
=FV(B63/2,2,,-D62)+B69
=FV(B64/4,4,,-D63)+B69
=FV(B65/12,12,,-D64)+B69
=FV(B66,1,,-D65)+B69

Principal Closing Balance

$3,127.64 $ 31,872.36
$3,205.05 $ 28,667.31
$3,284.38 $ 25,382.93
$3,365.66 $ 22,017.26
$3,448.97 $ 18,568.30
$3,534.33 $ 15,033.97
$3,621.80 $ 11,412.17
$3,711.44 $ 7,700.73
$3,803.30 $ 3,897.43
$3,897.43 $ -
 2.1
coupon rate 4%

PV $ 960
FV $ 980

a
Coupons $ 40
Selling Price $ 980
Purchasing Price $ 960
Dollar Returns $ 60 =B8+B9-B10

b
Capital Gain 2.08% =B9/B10-1

c
Income Yield 3.11% =RATE(2,1000*B2/2,-B4,B5)

d
Total Return 6.25% =B11/B4

The Calculation in total retuns included the dollar

returns divided by the purchasing price of the bond

2.2
Coupon Rate 4%
Term 10
YTM 3%
Selling YTM 4%

a
PV $1,085.84 =-PV(B30/2,B29*2,1000*B28/2,1000)

b
Selling Price $1,000.00 =-PV(B31/2,B29*2-2,1000*B28/2,1000)

Dollar Return $ (45.84) =B37+B37*B28-B34

Capital Gain yield -4.22% =B41/B34

e
Realized Return -7.91% =B37/B34-1

income yield -2.15% =RATE(2,B37*B28/2,-B34,B37)

Total Return -6.38% =B45+B53

The Calculation in total retuns included the a sum

of Realized and income yields. This is simply an
addition function

2.3
shares 1000
2016 price 10.56
2017 price 9.52
a
Return 10.92%

b
Yes these were the returns of Evans as the transactions were initiated on these dates
0*B28/2,1000)

000*B28/2,1000)
hese dates
 3.1

Year Investment A Investment B

2016 8% 53%
2015 8.20% -13%
2014 7.80% 32%
2013 9% 9%
2012 7% -40%
2011 8% 76%

a
Arithmatic Mean 8.00% 19.50%
Geometric Mean 7.98% 29.07%

b
Variance 0.0042% 18.3550%
SD 0.6450% 42.8427%

c
these are expost calculations as they are based on actual historical data

d
in this instance Arithmatic mean is more suted and as it takes into account negative
returns. It depicts positive trends as well.

e Risk Return
Investment A 0.6450% 8.00%
Investment B 42.8427% 7.98%

Risk/Return %
8.01%

8.00%

8.00%

7.99%

7.99%

7.98%

7.98%

7.97%

7.97%
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.

f
RF 2%
Investment A 9.30
Investment B 0.14
g
Investment A has a larger Sharpe ratio, indicating it to be a better investment than investment B

h
The only caution is that Tracy should not invest her funds completely in Investment A, She should d
her risk.

3.2

Year Returns M Returns N

2016 8% 28%
2015 12% 14%
2014 40% -2%
2013 -12% 60%
2012 -12% -55%

State of economy Probability Returns M Returns N

High Growth 5% 40% 21%

Moderate Growth 20% 24% 14%
No Growth 50% 7% 12%
Moderate Recession 20% -12% 5%
Severe Recession 5% -33% -14%

a Returns M Returns N
AM 7.20% 9.00%
GM 14.08% 19.17%
Range 52% 115%
SD 21.43% 42.44%

b Returns M Returns N
ER 6.25% 10.15%
Range 73% 35%
Variance 8.31% 1.78%
SD 28.82% 13.35%

c
Past Experience shows that Stock N had the best performance
d
Past Experience shows that Stock N had the greater risk
e
forecast shows that Stock N had greater Performance
f
forecast shows that Stock M had greater risk
g
this sometimes happens as the stock goes completely reversal
on previous trends and walks the path of macro economic
indicators.
00% 35.00% 40.00% 45.00%
t than investment B

tment A, She should diversify

 4.1
Cost of Capital 10%
beta 2.13
Market Premium 6.45%
current price 99.1456
Par Value 100
risk free rate 0.85% =1-B5/B6

Required discount rate

14.59% =B7+B3*(B4)