ufsguy

[ufsguy]

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swaps are otc agreements, so returning it to an exchange doesn’t make much sense…

[ufsguy]

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wm247, I would calc the cashflow and the terminal value first.  Then, I would use the CF input function in the calculator and compute the NPV.

[ufsguy]

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I get $91.7

CF1 = 3.4(1.2) = 4.08/(1.15) = 3.54783
CF2 = 4.08(1.2) = 4.896/(1.15)^2 = 3.70208
CF3 = 4.896(1.14) = 5.58/(1.15)^3 – 3.66894
CF4 and beyond = 5.58(1.10) = 6.13958/(.15-.10)= 122.7916/(1.15)^3 = 80.73727

3.54783+3.70208+3.66894+80.73727 = 91.65612 

[ufsguy]

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oh… it says what’s the least likely method…. yes, c is the best answer.

[ufsguy]

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Treasury stock is a contra-account, posted against Capital Stock and Additional Paid In Capital.

[ufsguy]

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Hi All, I’m a level 1 Candidate and a CPA.

[ufsguy]

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55,000 + 8,000 – 750 -850 -350+350 = 61,400

[ufsguy]

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The question did not refer to a long-term project, so I can see where one would use the three month t-bill as the risk-free rate.  Tricky.

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