Finance: Determination of Present Value, Growth Rate, Effective Annual Rate, Loan Payment, Yield to Maturity, and Coupon Rate

Running head: FINANCE
Finance:
Name of the Student:
Name of the University:
Author’s Note:

1FINANCE
Table of Contents
Question 1..................................................................................................................................2
Question 2..................................................................................................................................4
Question 3..................................................................................................................................5
References..................................................................................................................................7

2FINANCE
Question 1
a) The amount that would be received by the company from the bank would be around
$1094.12 and the same would be received in the four-years of time frame where the
bank in correspondence to the same would be receiving an amount equal to $26.20 at
end of every month (Muda and Hasibuan 2018).
Present Value Determination
Future value (FV) $0
PMT $26.20
Number of years (n) 4
Annual interest rate (r) 7.0%
No. of compounding periods per year (m) 12
Number of periods (m x n) 48
Periodic rate (r/m) 0.6%
Present value (PV)
-
$1,094.12
b) The growth of the revenue will be at a 10.10% per annum where the annual growth
rate of the revenue will be taken from the base level of revenue which is around
$445.2. The final figure of the revenue at the end of the fifth year will be around
$720.2641.
Growth Rate in Revenue
Year 0 1 2 3 4 5
Revenue
445.
2 445.2
490.165
2
539.671
9
594.178
7
654.190
8
Growth Rate 0 10.10% 10.10% 10.10% 10.10% 10.10%
Total
Revenue
445.
2
490.165
2
539.671
9
594.178
7
654.190
8
720.264
1
c) The effective annual rate of the loan for the various term period is defined below. The
compounding period taken into consideration for determining the effective annual rate
of interest is the monthly, semi-annually and daily compounding basis. The Effective
annual rate of interest for the monthly compounding return was around 5.59%, on a