Chapter4 Problems 4 – 8, 4 – 13, & 4 – 21
4– 8
You want to buy a car, and a local bank will lendyou $20,000. The loan would be fully amortized over 5 years (60 months), andthe nominal interest rate would be 12%, with interest paid monthly. What is themonthly loan payment? What is the loan’s EFF%?
4– 13
Find the present value of the following ordinary annuities.

$400per year for 10 years at 10%

$200per year for 5 years at 5%

$400per year for 5 years at 0%

Nowrework parts a, b, and c assuming that payments are made at the beginning ofeach year; that is, they are annuities due.
4– 21
Sales for Hanebury Corporation’s justended yearwere $12 million. Sales were $6 million 5 years earlier.

Atwhat rate did sales grow?

Supposesomeone calculated the sales growth for Hanebury in part a as follows: “Salesdoubled in 5 years. This represents a growth of 100% in 5 years; dividing 100%by 5 results in an estimated growth rate of 20% per year.” Explain what iswrong with this calculation.
Chapter5 Problems 5 – 9, 5 – 13
5– 9
The Garraty Company has two bond issues outstanding.Both bonds pay $100 annual interest plus $1,000 at maturity. Bond L has amaturity of 15 years, and Bond S has a maturity of 1 year.

Whatwill be the value of each of these bonds when the going rate of interest is (1)5%, (2) 8%, and (3) 12%? Assume that there is only one more interest payment tobe made on Bond S.

Whydoes the longerterm (15year) bond fluctuate more when interest rates changethan does the shorterterm bond (1 year)?
5– 13
You just purchased a bond that matures in 5 years.The bond has a face value of $1,000 and has an 8% annual coupon. The bond has acurrent yield of 8.21%. What is the bond’s yield to maturity?
Chapter7 Problem 7 – 17
7– 17
Kendra Enterprises has never paid a dividend. Freecash flow is projected to be $80,000 and $100,000 for the next 2 years,respectively; after the second year, FCF is expected to grow at a constant rateof 8%. The company’s weighted average cost of capital is 12%.

Whatis the terminal, or horizon, value of operations? (Hint: Find the value of allfree cash flows beyond Year 2 discounted back to Year 2.)

Calculatethe value of Kendra’s operations.
Chapter9 Problems 9 – 7 & 9 – 11
9– 7
Shi Importer’s balance sheet shows $300 million indebt, $50 million in preferred stock, and $250 million in total common equity.Shi’s tax rate is 40%, rd =6%, rps= 5.8%,and rs=12%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and65% common stock, what is its WACC?