Racing Motors wants to save $825,000 to buy some new equipment three years from now. The plan is to set aside an equal amount of money on the first day of each quarter starting today. How much does the company need to save each quarter to achieve its goal if it can earn 4.45 percent on its savings?

Beginning three months from now, you will need $1,500 each quarter for the next four years to cover expenses. How much do you need to have saved today to meet these needs if you can earn .35 percent interest per quarter?

A bond with 16 years to maturity and a semiannual coupon rate of 5.89 percent has a current yield of 5.57 percent. The bond’s par value is $2,000. What is the bond’s price?

You are the recipient of a gift that will pay you $25,000 one year from now and every year thereafter for the following 24 years. The payments will increase in value by 2.5 percent each year. If the appropriate discount rate is 8.5 percent, what is the present value of this gift?

The stock in Up-Towne Movers is selling for $45.80 per share. Investors have a required return of 10.8 percent and expect the dividends to grow at 4.2 percent indefinitely. What was the dividend the company just paid?

You purchased a 10-year bond at par value when it was originally issued. It has an annual coupon of 5 percent and matures five years from now. Coupons are paid semiannually. Which one of the following statements applies to this bond if the relevant market interest rate is now 4.7 percent?

George Jefferson established a trust fund that will provide $212,500 per year in scholarships. The trust fund earns an annual return of 3.5 percent. How much money did Mr. Jefferson contribute to the fund assuming that only income is distributed?

Aidan can afford $240 a month for five years for a car loan. If the interest rate is 8.5 percent, what is the most he can afford to borrow?

Sankey Company has earnings per share of $3.65. The benchmark PE is 18.2 times. What stock price would you consider appropriate?

A zero coupon bond: