How to answer finance exam Q3
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41. Two years ago you purchased a new SUV. You financed your SUV
for 60 months (with payments made at the end of the month) with a loan at 5.9%
APR. Your monthly payments are $617.16
and you have just made your 24th monthly payment on your SUV.
Required: Assuming
that you have made all of the first 24 payments on time, how much interest have
you paid over the first two years of your loan? (10 marks)
42. Consider the following list of projects:
|
Project |
Investment |
NPV |
|
A |
405,000 |
18,000 |
|
B |
600,000 |
90,000 |
|
C |
375,000 |
60,000 |
|
D |
450,000 |
6,000 |
|
E |
525,000 |
30,000 |
|
F |
225,000 |
30,000 |
|
G |
240,000 |
27,000 |
|
H |
600,000 |
60,000 |
|
I |
150,000 |
12,000 |
|
J |
270,000 |
30,000 |
You are given a
budget of only $1,800,000 to invest in projects.
Required: Which
projects will you select, in what order will you select them, and why? (10
marks)
43. Consider the following three individuals’ portfolios
consisting of investments in four stocks:
|
Stock |
Beta |
Peter’s |
Paul’s |
Mary’s |
|
Eenie |
1.3 |
2,500 |
5,000 |
10,000 |
|
Meenie |
1.0 |
2,500 |
5,000 |
10,000 |
|
Minie |
0.8 |
2,500 |
5,000 |
-5,000 |
|
Moe |
-0.5 |
2,500 |
-5,000 |
-5,000 |
Required: Assuming
that the risk-free rate is 4% and the expected return on the market is 12%,
then calculate the required return on Mary’s portfolio. (10 marks)
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