How to answer finance exam Q3
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)
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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 Investment |
Paul’s Investment |
Mary’s Investment |
|
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)
