ASSIGNMENT 1MGF 301Corporation FinanceSpring 2010DUE: Wednesday, February 3rd at 10:30am in Jacobs 365You may in a group of up to 4 on this Assignment. Please indicate clearly on all submitted Assignments who the members of the group are. Please note, all assignments submitted with more than 4 group members will automatically receive a 0 grade. No late assignments will be accepted. You may hand in the assignment in person in Jacobs 365 (put it under the door if no one is there) or submit it by email to the Digital Dropbox on UBLearns before the time it is due. All electronic submissions must be to the Digital Dropbox (go to Control Panel, Digital Dropbox and hit “Send file”). Note: If you use Digital Dropbox, please follow all the Digital Dropbox rules (see Syllabus).________________________________________________________________________________________________________Answer all of the following questions. For each answer, show your work to get full points (stating the answer alone is not sufficient).1. Each member of your group should buy one or three stocks at Stocksquest.com. To login select a userid/password and join group: MGF301Assign1 (password = mgf301). Invest at least $90,000 total of your $100,000 portfolio as follows: Students with last names A-L should buy one stock only and put at least 90,000 into the stock; Students with last names M-Z should buy three stocks by putting approximately equal amounts in three stocks, with the total investment equaling at least 90,000.Include your userid and your stock selection(s) as the answer to question 1 of this assignment.2. Your uncle died last year and left you money in his will. You are to receive $120,000 six years from today (i.e., in time 6). (a) What is the value of the inheritance today (in time 0) if the appropriatediscount rate is 6% and you compound annually?(b) If you invest the money when you receive it in time 6, how much will it grow to 30 years from today (i.e., in time 30) if you earn 6%each year?3. Your neighbor is buying a new recreational vehicle (RV). He has the following optionsto finance the RV:I. Pays $30,500 today (in time 0)II. Buy under a delayed payment program requiring payments of $6,000 intime 1, $8,000 in time 2, $10,000 in time 3 and $12,000 in time 4.. III. Make 72 monthly payments over 6 years of $510 payable at the end of each month.(a) If the interest rate is 6.5% annually, calculate the present value of each option.(b) What is the interest rate where Option I and Option II have the same present value?4. (a) If you will be making equal deposits into a retirement account for the next 15 years (with each payment at the end of the year 1 through 15), how much must you deposit each year if the account earns 5% compounded annually and you wish the account to grow to $300,000 30 years from today (in time 30)? (b) How does your answer change if the account pays interest compounded monthly at an annual rate of 5%? Note: use monthly compounding for all calculations.5. You belong to an unusual pension plan because your retirement payments will continue forever (and will go to your descendants after you die). If you will receive $45,000 per year at the end of each year starting 35 years from now, what is the present value of your retirement plan if the discount rate is
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