Business Finance Homework Help

I’m studying for my Business class and don’t understand how to answer this. Can you help me study?

Week 2: Chapter problems

Class – Please answer the following problem questions .

1. Future value: Your bank pays 5 percent annual interest compounded semiannually on your savings account. You don’t expect to add to the current balance of $2,700 over the next four years. How much money can you expect to have at the end of this period?

2. Present value: You want to buy some bonds that will have a value of $1,000 at the end of seven years. The bonds pay 4.5 percent interest annually. How much should you pay for them today?

3. Effective annual interest rate: Cyclone Rentals borrowed $15,550 from a bank for three years. If the quoted rate (APR) is 6.75 percent, and the compounding is daily, what is the effective annual interest rate (EAR)?

4. The Security Market Line: If the expected return on the market is 10 percent and the risk-free rate is 4 percent, what is the expected return for a stock with a beta equal to 1.5? What is the market risk premium?