Valuation and Discounted

Cash Flows
ANTHONY 291 17 005
SOFIA PUJIASTI 291 17 053
AFRISKA YUNI ANGGRAINI 291 17 238 SYNDICATE 10
ARFAN NUR AKBAR 291 17 246
Question 1
Annual effective yield : (1 + (i/n)n – 1

For 1st bond :

I = 10%, n = 15
So, the annual yield is 10,48%

For 2nd bond :

I = 9,72%, n =15
So, the annual yield is 10,17%
Question 1 - cont.
Future payments : PV (1+i)n

For 1st bond :

N = 15, I = 10, PV = $ 10,000,000
FV = $ 41,772,482

For 2nd bond :

N = 15 years = 180 months, I = (9.17%/12) = 0.81, PV = 10,000,000
FV = $ 42,721.909.3
Question 2

Ending Principal Balance $ 13.098,49

Annual payment $ 1,517.76

Annual interest rate 3%

Loan Period in years 20

NPV of Annual Payment 840.35

Question 2 - cont.
Current principal outstanding $ 13.098,49

Discount 30%

Payment period in years 10

Annual mortgage rate 12%

Principal after discount $ 9,168.94

Annual payment $1,623

PV of annual payment $522.48

Question 2 - cont.
Current principal outstanding $ 13.098,49

Payment period in years 5

Annual mortgage rate 0%

Annual payment $ 2,620

PV of annual payment $2,619.70

Question 4
Price of Bond = PV (rate, NPER, PMT, FV)

Bond Maturity Rate Coupon Face Coupon PMT

A 5 8% 9% $ 1000 $ 45

B 10 8% 8% $ 1000 $ 40

C 10 8% 0 $ 1000 -
 Question 4 - cont.
Bond FV PV

A $ 1,000.00 - $ 961.39

B $ 1,000.00 - $ 875.38
Bond FV PV
C $ 1,000.00 - $ 376.89
A $ 1,000.00 - $ 1,040.55

B $ 1,000.00 - $ 1,000.00 Bond FV PV

C $ 1,000.00 - $ 456.39 A $ 1,000.00 - $ 1,127.95

B $ 1,000.00 - $ 1,148.77

C $ 1,000.00 - $ 553.68
Question 4 - cont.
Effective Annual YTM of Bond B = (1+(8%/2))^2 -1 = 8.16%

The annual YTM of Maximum S.A Nationaliste Bonds = 8.15%

Therefore , Ms. Alumm should invest in Bond B Which will

return little higher than Nationaliste Eurobond
Question 5
Plan 1

Cost = 10,000
r = 8%
n = 30

Basic Valuation Model

PV = for n=1 to N = C / (1+r)n
= $ 112,577.8334

For 100 workers, we need $112577,8334 * 100 = $ 11,257,783.34

Question 5 - cont.
Plan 2

Cost = $ 8,000
r = 8% g = 5% n = 30

Basic Valuation Model

PV = for n=1 to N = C(1+g)n-1 / (1+r)n
= $ 152,132.504

For 100 workers, we need $ 152,132.504 * 100 = $ 152,132,504.00

 thanks!
Any questions?

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