Using the internet and the book Melicher, R. W., & Norton, E. A. (2011). Introduction to finance

Using the internet and the book Melicher, R. W., & Norton, E. A. (2011). Introduction to finance (14th ed.). Hoboken, NJ: John Wiley & Sons. as resources, resolve the following exercises and briefly developed the cited questions on a two pages summary.

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• Using the Internet, research the Gross Domestic Product (GDP) for the most recent three-year period( e-Activity), identify the most significant U.S. GDP results and trends for the most recent three-year period. Indicate the key factors that you believe have had an impact on the GDP increase or decrease. Provide support for your rationale.
• The Federal Reserve Board has kept the federal rate to a nominal rate in recent years. Explain the rationale for this behavior, indicating the effectiveness on financial markets.

• Watch the video titled “The Time Value of Money” (3 min 0 s) from the Teach Me Finance Website, located at , to learn how to calculate the present and future value of money ( e-Activity), create a personal scenario that exemplifies the time value of money that includes the opportunity cost involved.
• Describe one (1) real-life example that shows the manner in which a person can use an annuity for retirement planning.

4. Assume personal income was $ 28 million last year. Personal outlays were $ 20 million and personal current taxes were $ 5 million. a. What was the amount of disposable personal income last year? b. What was the amount of personal saving last year? c. Calculate personal saving as a percentage of disposable personal income.
5. A thirty- year U. S. Treasury bond has a 4.0 percent interest rate. In contrast, a ten- year Treasury bond has an interest rate of 3.7 percent. If inflation is expected to average 1.5 percentage points over both the next ten years and thirty years, determine the maturity risk premium for the thirty- year bond over the ten- year bond.
6. Determine the present values if $ 5,000 is received in the future ( i. e., at the end of each indicated time period) in each of the following situations: a. 5 percent for ten years b. 7 percent for seven years c. 9 percent for four years

• Suppose you were given an opportunity to own a business of your choosing. First, briefly describe your business; then explain the most efficient way to raise capital to either start or expand your business. Provide support for your response.
• Determine at least two (2) key advantages of equity financing compared to debt financing options. Provide a rationale for your response.

22. The Fridge- Air Company’s preferred stock pays a dividend of $ 4.50 per share annually. If the required rate of return on compara-ble quality preferred stocks is 14 percent, calculate the value of Fridge- Air’s preferred stock.
23. The Joseph Company has a stock issue that pays a fixed dividend of $ 3.00 per share annually. Investors believe the nominal risk- free rate is 4 percent and that this stock should have a risk premium of 6 percent. What should be the value of this stock?
24. The Lo Company earned $ 2.60 per share and paid a dividend of $ 1.30 per share in the year just ended. Earnings and dividends per share are expected to grow at a rate of 5 percent per year in the future. Determine the value of the stock: a. if the required rate of return is 12 percent. b. if the required rate of return is 15 percent. c. Given your answers to ( a) and ( b), how are stock prices affected by changes in investor’s required rates of return.