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    Kunal Nakum
    1) The document contains examples of cash flows and calculations of present value using different discount rates. 2) Historical data on nominal interest rates, inflation rates, and real returns is presented for several years. Average and variance of risk premium is also calculated. 3) Stock returns for Ms. Rajesh and the Sensex are given for three periods along with their average standard deviation.

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    Untitled

    Uploaded by

    Kunal Nakum
    32 views6 pages
    1) The document contains examples of cash flows and calculations of present value using different discount rates. 2) Historical data on nominal interest rates, inflation rates, and real returns is presented for several years. Average and variance of risk premium is also calculated. 3) Stock returns for Ms. Rajesh and the Sensex are given for three periods along with their average standard deviation.

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    1) The document contains examples of cash flows and calculations of present value using different discount rates. 2) Historical data on nominal interest rates, inflation rates, and real returns is presented for several years. Average and variance of risk premium is also calculated. 3) Stock returns for Ms. Rajesh and the Sensex are given for three periods along with their average standard deviation.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    32 views6 pages

    Untitled

    Uploaded by

    Kunal Nakum
    1) The document contains examples of cash flows and calculations of present value using different discount rates. 2) Historical data on nominal interest rates, inflation rates, and real returns is presented for several years. Average and variance of risk premium is also calculated. 3) Stock returns for Ms. Rajesh and the Sensex are given for three periods along with their average standard deviation.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 6

    19) Rate 12%

    a) Cashflow 100000
    PV 100000

    b) Cashflow 180000
    t 5
    PV 102136.83402935

    c) Cashflow 11400 a year forever


    PV 95000

    d) Cashflow 19000 each year


    t 10
    AF 5.6502230284109
    PV 107354.23753981

    e) Cashflow 6500
    Growth 5%
    PV 92857.142857143
    3) compounded Semiannually
    YTM 6.91%
    t 5
    Coupon rate 8.20%
    P 139.55 (Let face value be 100)

    4) Face Value 100


    Coupon Rate 5%
    Interest Rate 6%
    t 10
    AF(Coupon) 7.3600870514147
    Coupon 5
    DF 0.5583947769151
    PV 92.64

    10) Coupon Rate 8%


    YTM 6%
    Face value 100
    t 4 (As value after 1 year is asked t would be (5-1=4))
    a) Coupon 8
    AF 3.4651056126997
    DF 0.792093663238
    P 106.93

    PV 108.42 (t=5)

    b) Total Return 6.0%


    4) Current Stock Price 40
    Dividend 5
    Market Capitalisation rate 12.5%

    5) Market Cap rate 8%


    Dividend(next Year) 10
    Growth 5% a year
    Current stock price 333.33

    18) Market capitalisation Rate 10%


    a) Dividend 10 forever
    P 100

    b) Dividend 5 next year


    Growth 4% a year forever
    P 83.33

    c) Dividend 5 next year


    Growth 20% a year for 5 year
    P 97.4821358113

    Year Dividend P
    1 5.00 4.5454545454546
    2 6.00 4.9586776859504
    3 7.20 5.4094665664914
    4 8.64 5.9012362543542
    5 10.368 6.4377122774773
    6 12.442 70.229588481571
    97.482135811299

    *If market capitalisation is 10% then Stock C is most valuable


    *If market capitalisation is 7% then Stock B is most valuable.
    Market Capitalisation Rate 7%

    P 142.86

    P 166.67

    P 148.2082926

    Year Dividend P
    1 5.00 4.672897196
    2 6.00 5.24063237
    3 7.20 5.877344714
    4 8.64 6.591414632
    5 10.368 7.392240709
    6 12.442 118.433763
    148.2082926
    2) Year Nominal Rate(%) Inflation(%) Real return%
    2013 4.50% 7.40% -2.7%
    2014 10.50% 6% 4.2%
    2015 32% 2% 29.4%
    2016 -0.90% -2.50% 1.6%
    2017 3.90% 3.70% 0.2%
    Average 10.0% 6.6%
    Variance 0.0168 (Manual)
    SD 12.95%
    SD 12.95% (Excel Formula)

    3) 1998-1999 1999-2000 2000-2001


    Ms Rajesh -6.20% 48.07% -1.50%
    Sensex -12% 42.3% -6.6%

    10) Year Inflation Nominal rate% T-Bill Return


    1929 -0.2% -14.5% 4.8%
    1930 -0.6% -28.3% 2.4%
    1931 -9.5% -43.9% 1.1%
    1932 -10.3% -9.9% 1.0%
    1933 0.5% 57.3% 0.3%
    Average
    SD of Risk Premium 39.46% (excel formula)
    Variance 0.16 (Manual)
    SD 39.46%
    2001-2002 2002-2003 Average SD
    -6.91% -1.10% 6.47% 23.40%
    -19.9% -0.3% 0.70% 24.34%

    Real return% Market risk Premium


    -14.3% -19.3%
    -27.9% -30.7%
    -38.0% -45.0%
    0.4% -10.9%
    56.5% 57.0%
    -4.6% -9.8%

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