Week 2 Problem Set Prepare a spreadsheet that shows your calculations for the following problems for time value and bonds. Part 1:  Time Value of Money 1.  The value of a house is estimated to be $180,000 today.  (a) If it has increased in value by 4.5% per year for the past 10 years, what was the value 10 years ago? (b) If the house had increased in value by 40% over the entire 10-year period, what would have been the annual percentage increase? · (a) = 115,907 · (b) = 3.422% 2.  Mr. and Mrs. Smith are considering the purchase of a house.  They can budget a mortgage payment (P&I) of $1,400 per month.   (a) If the current mortgage rate is 4.25% for a 30-year mortgage and they make a down payment of 20% of the purchase price, can they buy a house costing $300,000?  (b) What is the maximum amount they can borrow? · (a) = 1180.66 --> Yes · (b) = 284,587 3.  Mr. Jones bought a car 2.5 years ago and borrowed 25,284.72 from the credit union.  The interest rate was 3.49% for a 5 year loan.  (a) what is the monthly payment on the car?  (b)  What is the current outstanding principal balance on the car loan? · (a) = 459.86 · (b) = 13,192.73 4.  After graduation, you plan to work for Mega Corporation for 10 years and then start your own business.  You expect to save $5,000 a year for the first 5 years and $10,000 annually for the following 5 years, with the first deposit being made a year from today.  In addition, your grandfather just gave you a $20,000 graduation gift which you will deposit immediately.  If the account earns 8% compounded annually, what how much will you have when you start your business 10 years from now? · 144,944 5. You are interested in buying a duplex as an investment.  Your discount rate for evaluating cash flows is 12%.  A property you are considering is expected to produce the following cash flows: Year Cash Flow 1 5,500 2 6,500 3 8,500 4 12,500 5 179,000  What is the present value of these cash flows? · 125,655 6.  An income stream that has a negative flow of $200 per year for 2 years, a positive flow of $300 in the 3rd  year, and a positive flow of $500 per year in Years 4 through 6.  The appropriate discount rate is 4% for each of the first 3 years and 5% for each of the later years.  Thus, a cash flow accruing in Year 6 should be discounted at 5% for some years and 4% in other years.  All payments occur at year-end.  Calculate the present value of the income stream.  · 1,099.96 7.  Prepare an amortization schedule based on the following information:    You are purchasing a car for $19,500 and you are getting a loan for the entire amount.  The interest rate from Honda Motor Finance Corporation is 9.9% per year.  Your loan in a unique one in that you only have to pay twice per year (at the end of every 6 months).  The loan has a 3-year term, but you plan to make a lump sum payment after 2 years in order to pay off the loan.  Find out what the ending balance on the loan will be after 2 years and complete an amortizati.

1. Week 2 Problem Set
Prepare a spreadsheet that shows your calculations for the
following problems for time value and bonds.
Part 1: Time Value of Money
1. The value of a house is estimated to be $180,000 today. (a)
If it has increased in value by 4.5% per year for the past 10
years, what was the value 10 years ago? (b) If the house had
increased in value by 40% over the entire 10-year period, what
would have been the annual percentage increase?
· (a) = 115,907
· (b) = 3.422%
2. Mr. and Mrs. Smith are considering the purchase of a house.
They can budget a mortgage payment (P&I) of $1,400 per
month. (a) If the current mortgage rate is 4.25% for a 30-year
mortgage and they make a down payment of 20% of the
purchase price, can they buy a house costing $300,000? (b)
What is the maximum amount they can borrow?
· (a) = 1180.66 --> Yes
· (b) = 284,587
3. Mr. Jones bought a car 2.5 years ago and borrowed
25,284.72 from the credit union. The interest rate was 3.49%
for a 5 year loan. (a) what is the monthly payment on the car?
(b) What is the current outstanding principal balance on the car
loan?
· (a) = 459.86
· (b) = 13,192.73
4. After graduation, you plan to work for Mega Corporation for
10 years and then start your own business. You expect to save
$5,000 a year for the first 5 years and $10,000 annually for the

2. following 5 years, with the first deposit being made a year from
today. In addition, your grandfather just gave you a $20,000
graduation gift which you will deposit immediately. If the
account earns 8% compounded annually, what how much will
you have when you start your business 10 years from now?
· 144,944
5. You are interested in buying a duplex as an investment. Your
discount rate for evaluating cash flows is 12%. A property you
are considering is expected to produce the following cash flows:
Year
Cash Flow
1
5,500
2
6,500
3
8,500
4
12,500
5
179,000
What is the present value of these cash flows?
· 125,655
6. An income stream that has a negative flow of $200 per year
for 2 years, a positive flow of $300 in the 3rd year, and a
positive flow of $500 per year in Years 4 through 6. The
appropriate discount rate is 4% for each of the first 3 years and
5% for each of the later years. Thus, a cash flow accruing in
Year 6 should be discounted at 5% for some years and 4% in
other years. All payments occur at year-end. Calculate the
present value of the income stream.
· 1,099.96
7. Prepare an amortization schedule based on the following

3. information:
You are purchasing a car for $19,500 and you are getting a loan
for the entire amount. The interest rate from Honda Motor
Finance Corporation is 9.9% per year. Your loan in a unique
one in that you only have to pay twice per year (at the end of
every 6 months). The loan has a 3-year term, but you plan to
make a lump sum payment after 2 years in order to pay off the
loan. Find out what the ending balance on the loan will be after
2 years and complete an amortization table with the following
columns filled in for periods 1-4: Beginning Balance, Payment,
Interest, Principal, Ending Balance.
· Ending Balance = 7,137.20
8. Upon graduation, you’ve decided you won’t accept a job
unless the total compensation you receive has a present value of
at least $90,000. You have determined that the appropriate
interest rate is 6% per year (nominal). You receive an offer
from CBA Inc. where you get paychecks at the end of every 2
weeks (26 times per year). The offer includes a signing bonus
of $5,000 that is paid immediately and a bonus of $7,500 that is
paid along with your final (26th) regular paycheck of the
year. How much must your regular paycheck be in order for
you to accept CBA’s offer?
· $3,091.83
Part 2: Bond Valuation
1 What is the price of a bond that pays $40 every six months,
matures in 20 years and has a yield to maturity of 6.65%?
$1,148.14
2.What is the price of a bond that pays $20 every three months,
matures in 20 years and has a yield to maturity of 6.65%?
$1,148.73
3. What is the coupon rate for a bond that is priced at $917.87,
has 5 years to maturity, has an interest rate of 7.5% and pays

4. coupons semiannually? 5.0%
4. How long until maturity for a bond that is priced at $556.84
with a yield to maturity of 5% and a $1000 face value. The bond
makes no interest payments (zero-coupon bond). Assume
annual compounding. 12 years
5. What is the yield to maturity for a bond priced at 1106.95
that pays coupons of $13.75 every six months for the next 12.5
years? 1.79%
6. Bond X is a premium bond making annual payments. The
bond has a coupon rate of 9%, a YTM of 7% and has 13 years to
maturity. Bond Y is a discount bond making annual payments.
The bond has a coupon rate of 7%, a YTM of 9% and has 13
years to maturity.
What are prices of the bonds today?
· X=1167.15, Y=850.26
If interest rates remain unchanged, what will the bond prices be
in 1 year? 3 years? 5 years? 10 years? 13 years? Discuss what
is happening with the bond prices over time.
· X=1158.85, 1140.47, 1119.43, 1052.49 after 1,3,5, and 10
years respectively.
· Y=856.79, 871.65, 889.30, 949.37 after 1,3,5, and 10 years
respectively.
7. There are two bonds that have identical 7% coupons, make
semi-annual payments and are priced at par. Bond A has 4 years
to maturity; Bond B has 20 years to maturity.
What are interest rates today? 7%
If interest rates increase by 2%, what will be the new price of
the two bonds? What is the percentage change in the prices?
· A=934.04, -6.6% change

5. · B=815.98, -18.4% change
Now assume that interest rates decrease by 2% from where they
were originally. Now that are the prices for the two bonds and
what are the percentage changes in their prices?
· A=1071.7, +7.17% change
· B=1251.03, +25.10% change
Interest rate risk is a measure of how much a bond’s value
changes when interest rates change. Which of these bonds has
the highest interest rate risk?
8. There are two bonds that both have 10 years to maturity and
have a YTM of 8%. Bond Alpha has a 4% coupon rate (with
semi-annual payments) and Bond Beta has a 12% coupon rate
(with semi-annual payments).
What are prices of the bonds today?
Alpha=728.19; Beta=1271.81
If interest rates increase by 2%, what will be the new price of
the two bonds? What is the percentage change in the prices?
Alpha=626.13; Beta=1124.62
Now assume that interest rates decrease by 2% from where they
were originally. Now that are the prices for the two bonds and
what are the percentage changes in their prices?
Alpha=851.23; Beta=1446.32
Interest rate risk is a measure of how much a bond’s value
changes when interest rates change. Which of these bonds has
the highest interest rate risk?

6. Select a country other than the USA that is a member of the
International Monetary Fund. Consider using the country you
researched for the Unit 1 Discussion. The website for the IMF
is: www.imf.org (Links to an external site.)
Answer the following questions:
1.Does this country participate in a regional monetary system to
manage exchange rates?
2.How have inflation and interest rates affected the nation�s
exchange rate with other currencies?
3.What impact has the country�s exchange rate had on its
imports and exports?
4.How has the exchange rate recently affected:
1.The activities of companies operating in the country?
2.The purchasing power of consumers?
5.What is the forecasted exchange rate for the upcoming months
and year?
Requirements
1.Include a cover page and a reference pages as needed.Write
your answers in complete sentences.
2.Justify and support your responses using information found in
your text and through research.
3.Avoid copying text directly from the textbook. This is
considered plagiarism and is not acceptable. Write your answers
in your own words.
Unit 3 Discussion: International Financial Markets
1 1 unread reply. 1 1 reply.

7. International financial markets allow companies to exchange
currencies and to acquire funding. If a company cannot obtain
financing in its own country, the company may be able to get
financing in an international market. The price of such
financing fluctuates and is determined by supply and demand.
This fluctuation is highly dependent upon exchange rates or the
rate of conversion from one currency to another. For example, a
USA based company that is operating in Japan would convert
dollars to yen. This exchange rate fluctuates or goes up and
down. International business people track currency rates and
values over time since these fluctuations impact profitability.
Consider and discuss the following questions regarding
international finance and business:
•Some people believe that we must have a truly global capital or
financial market in order to maximize business ventures and
profit. What factors do you think are holding back the creation
of a truly global capital market?
•How might a truly global capital market function differently
from the current international business market? (Consider
interest rates, currencies, regulations and financial crises
experienced in some countries.)
•Having to use different currencies in international business
prevents maximum growth and activity. What are the pros and
cons (for both businesses and governments) or replacing
national currencies with a regional or even a global currency?
•If we do go to a global or international monetary system,
would such an international system use a floating or fixed
exchange rate? Explain your answer. Would it be possible to
base an international currency on gold? Why or why not?
•Is there a need for regulation among international financial
centers to control money laundering and other illegal activities?
As we have learned, benchmarking provides a way to help

8. define an organization's goals and directives. Through employee
and customer feedback, benchmarking helps us to see not only
where we are but also what we want to become. In this process,
we set goals, and we formulate a vision statement.
A company's vision statement lets all stakeholders know what
the company hopes to achieve. Can this vision be a dream? Yes,
in a way. But, the dream must be attainable. The vision may be
a stretch, and the goals may be challenging. However, this
vision and goals are attainable with the proper use of resources
and with the desire and motivation to achieve these goals.
Why is this mission or strategic intent so important to change
management? This mission, this strategy, these goals give
stakeholders a "beacon of light" to keep everyone focused, on
task and on track. This mission helps move people through the
difficult stages and processes of change.
However, even with the best laid plans and properly constructed
mission and goals, we must have foresight, direction and
communication. Who provides this foresight? Who provides this
direction and communication? Who provides this leadership in
organizations? Let's find out!
For this discussion, prepare the following:
•Consider the company or organization where you work (now or
in the past). If you do not work, use an organization where you
participate (i.e., a church, a club, a school). Identify a leader in
this company or organization.
•What is his or her position in the company?
•Why do you consider this person to be a leader?
•What characteristics and skills does this person possess?
•What actions have they taken to help the company or
organization change or move forward into the future?
•In your opinion, what is this person's single most important
accomplishment?

9. •When you reply to your classmates, compare and contrast your
choices of leadership with their choices.
Using the same organization/industry that you used for the Unit
2 Case Assignment, prepare your report based on the following
information:
•Using a business perspective, define and give the
characteristics of organizational leadership.
•Describe the importance of strong leadership in change
management.
•Using the same company or organization as you did in the Unit
2 Case assignment, analyze the leadership in this organization.
◦Who are the leader(s)?
◦What are their strengths?
◦What are their weaknesses?
•Identify the organization's vision. (If you cannot find this
information through research, state what you think the vision
might be.)
•Is this organization's leadership ready to support this vision
and to move the organization into the future?
◦Justify your opinions with details and specifics. Give examples
of how the leadership has performed or has not performed.
◦Give specific examples of communication tactics.
•What is your role in this organization, or what potential role
might you have?
◦Do you consider yourself to be one of the leaders in change
management? If not, do you have the potential to be one of the
leaders?
•In conclusion, what recommendations do you have for
developing leadership potential within this company or
organization and forming a change management team?
Requirements
1.Refer to the grading rubric at the end of this page.
2.Your report should be from 2-3 pages long. This does not
include the cover page.

10. 3.Use APA style to format your paper and cite your sources.
You are not required to create an abstract. The APA tutorial
here in our course gives excellent help with citation. The EPI
Online Library has information and templates for APA citation.
You should also make good use of the Writing Assistance
Center (WAC). The instructors in the WAC can help you with
organization, structure, grammar and citation.
4.Insert a cover page that includes the title of your project, your
name, the course, and the date.
5.Your report must be in essay format. This means you must
write in complete sentences and paragraphs instead of just
inserting answers under headings.
6.You must use at least one outside resource for this report.
7.Name your file: BUS224_U3_Case_(Your last name)
8.Please make sure you proof your file in addition to running
spell check before submitting.
TIPS
•A company's website provides a wealth of information.
However, do not copy and paste directly from the company
website. If you take any text directly from any resource, put this
text in quotation marks.
•Personal interviews are also an excellent source of
information. Interview people who work for this company or
even someone who works for a competitor! Cite this source just
as you would any other source.
•If you work for the company, you cannot help but give your
own personal information. However, avoid using yourself as a
source for data or facts. This type of information must be
supported by a source - employee pamphlet, website, handbook,
interview, etc.
•Incorporate your own summaries, interpretations, ideas,
opinions into the company data and information you cite.
Researching information and then interpreting this information
is the primary purpose of any research project. I want to see
evidence of research, but I want to see your own ideas and

11. opinions and conclusions in these case reports as well.
You should work on this assignment as you go through the
chapter(s). This assignment reinforces information in your
textbook and concepts presented in this unit. You will be graded
on the accuracy and thoroughness of your responses. Please
write in complete sentences unless otherwise directed.
Remember to cite your textbook just as you would any other
resource. Your textbook and any additional outside resource
citation should use APA format.
1."A well-crafted vision is essential when making major
changes." (Effective Change, page 128) Explain what this
statement means.
2.Identify three characteristics of a well-crafted vision and
describe how these three characteristics relate to stretch goals.
3.Change plans must consider the use of a company's resources
to maximize potential and ensure success. Financial resources
are a definite consideration for any plan or objective. If you
must prepare a budget for a change initiative, what
considerations and items should you include in a budget?
Include a sentence or two explaining each item or consideration.
4.Communication is a two-way process. Communication is a
series of loops. A message must be sent and the message must
be received. However, the message must also be understood and
accepted if you are to achieve results. Make sure you review the
strategies for effective communication in your text. You might
also want to do some additional research regarding
communication loops and processes.
You are the manager for ABC Company. You are planning to
change the arrangement and design of the offices and work
stations on your floor. This means your employees will have to
relocate to another position or space. You know there will be
quite a bit of grumbling and unhappiness and even anger
regarding these changes. (Some of these people have been

12. sitting in the same place and at the same desk for about four
years!) You have decided to be proactive instead of reactive
with this change.
1.Construct a memo that will go to your three floor managers
about this upcoming change. You will need to make sure these
three managers understand your plans for this change and are on
board with this plan. Be sure to include what you expect from
them during the process. You should also ask for their input.
Include how you will specifically involve these managers in the
communication loop.
5.Refer to # 4 above. You plan to have a meeting with the
employees on your floor to explain your plan to change the
arrangement and design of their floor space. You must make
sure that your message is not only understood, but accepted!
You want to have as little resistance as possible. You might
even want to think of some way to motivate and reward these
employees if the change is successful and is completed without
issue.
1.Prepare an outline of talking points for this meeting. What do
you want to say to your employees at this meeting? (If you want
to write out your entire talk, you may.) What sort of visual aids
might you use in this meeting to illustrate your points and to
convince your people to accept this change and to help with this
change?
6.Define and describe the term "computer based training"
(CBT). If you manage an international company with offices in
another country, what are some of the practical applications for
CBT?
7.Define and describe the term "mentor" as the term relates to a
business or professional organization. How can mentors be used
to train new employees? How would you go about assigning a
mentor to a new employee? If you were to serve as a new hire's
mentor, what would you expect this person to learn from you?
Lastly, if you were to have a mentor (and everyone should)
where you work, what would you hope to learn? What would

13. you hope to gain?
8.Your company is getting ready to change to the latest and
greatest software package used in office applications. Everyone
in the entire company will be affected, from the CEO to the
receptionist at the front desk. You are the manager in charge of
this change initiative. You are going to make sure that the
change goes smoothly and is successfully implemented.
Define this change initiative. (You can determine a specific
software package if you like; i.e., the latest version of MS
Office, for example.) What Aare your objectives? (Be specific.)
9.Refer to #8. How will you assess the training needed to
implement this change? What training approaches and
processes will you put into place?
10.Refer to #8. How will you evaluate success? How will you
motivate? How will you reward?