How much did you borrow for your house if your monthly mortgage payment for a 30 year
mortgage at 6.65% APR is $1,600?
A $218,080
B $202,503
C $186,926
D $233,658
E $249,235
F $264,812
Shady Rack Inchas a bond outstanding with 9.75 percent coupon, paid semiannually, and 17
years to maturityThe market price of the bond is $1,042.43Calculate the bond’s yield to
maturity (YTM)Now, if due to changes in market conditions, the market required YTM suddenly
increases by 2% from your calculated YTM, what will be the percent change in the market price oFthe bond?
-17.09%
B -16.39%
C -17.76%
D -14.01%
E -15.66%
F -14.87%
Sanaponic, Incwill pay a dividend of $6 for each of the next 3 years, $8 for each of the years 4-7,
and $10 for the years 8-10 Thereafter, starting in year 11, the company will pay a constant
dividend of $5/year forever If you require 12 percent rate of return on investments in this risk
class, how much is this stock worth to you?
$37.77
$34.54
$50.50
$45.68
$41.46
$55.99
Your required rate of return is 15%. What is the net present value of a project with the following
cash flows?
Year 0 1 2 3 4 5
Cash Flow -750 450 350 150 125 -100
A 26.33
B 72.15
C 15.56
D 60.27
E 48.68
F 37.37
Please use the following information for this and the following two questions.
BB Lean has
identified two mutually exclusive projects with the following cash flows.
Year 0 1 2 3 4 5
Cash Flow Project A -52,000.00 18,000.00 17,000.00 15,000.00 12,000.00 9,000.00
Cash Flow Project B
-52,000.00 17,800.00 10,000.00 12,000.00 17,000.00
The company requires a 11.5% rate of return from projects of this risk.
What is the NPV of project
A?
A
5,972.87
B 417.37
C 1,395.64
D 1,624.90
E 5,180.35
F 972.57
What is the IRR of project B?
A
B12.06%
12.94%
C 13.05%
D 20.80%
E 13.90%
F 14.68%
At what discount rate would you be indifferent between these two projects?
A3.1177%
B
34.1306%
C 13.5250%
22,000.0
0
D 26.0812%
E 14.7386%
F 15.8950%
A bond with a face value of $1,000 has annual coupon payments of $100It was issued 10 years ago and has 7 years remaining to maturityThe current market price for the bond is $1,000Which of the following is true: Its YTM is 10%IIBond’s coupon rate is 9.5%IIIThe bond’s current yield is 10%.
AI, II Only
B I, III Only
C I, II, and III
D III Only
E I Only
F II, III Only
Riverhawk Corporation has a bond outstanding with a market price of $1,250.00 The bond has 10 years to maturity, pays interest semiannually, and has a yield to maturity of 9% What is the bond’s coupon rate?
A13.61%
B 11.31%
C 9.77%
D 10.54%
E 12.08%
F 12.84%
You purchased a stock for $20 per shareThe most recent dividend was $2.50 and dividends are Eexpected to grow at a rate of 8% indefinitelyWhat is your required rate of return on the stock?
A17.64%
B
21.50%
C 17.00%
D 18.38%
E 19.25%
F 20.27%
Sales and profits of Growth Incare expected to grow at a rate of 25% per year for the next six
years but the company will pay no dividends and reinvest all earningsAfter that, the dividends
will grow at a constant annual rate of 7%At the end of year 7, the company plans to pay its first
dividend of $4.00 per shareIf the required return is 16%, how much is the stock worth today?
A$22.80
B $15.96
C $20.52
D $25.08
E $18.24
F $13.68
Apple Sink Inc(ASI) just paid a dividend of $2.50 per share Its dividends are expected to grow at 26% a year for the next two years, 24% a year for the years 3 and 4, 16% for year 5, and at Aconstant rate of 6% per year thereafter What is the current market value of the ASI’s stock iFcompanies in this risk class have a 16% required rate of return?
A$56.03
B $48.35
C $51.29
D $45.54
E $54.27
F $42.87
The Retarded Company’s dividends are declining at an annual rate of 6 percent The company just paid a dividend of $4 per share You require a 16 percent rate of return How much will you pay for this stock?
A$13.85
B $19.20
C $17.09
D $15.33
E F$12.57
$21.78
The dividend yield of a stock is 9 percentIf the market price of the stock is $18 per share and its
dividends have been growing at a constant rate of 6%, what was the most recent dividend paid by the company?
A$1.36
B $1.53
C $1.02
D $1.70
E $1.19
F
$0.85
Last year, Jen and Berry Inchad sales of $45,000, cost of goods sold (COGS) of 12,000,
depreciation charge of $3,000 and selling, general and administrative (SG&A) cost of $10,000The interest costs were $2,500Twenty percent of SG&A costs are fixed costsIf its sales arEexpected to be $60,000 this year, what will be the estimated SG&A costs this year?
A$12,667
B $12,000
C $10,636
D $11,500
E $14,250
F $13,250
You require a risk premium of 3.5 percent on an investment in a companyThe pure rate oFinterest in the market is 2.75 percent and the inflation premium is 3 percent US Treasury bills
are risk freeWhat should be the yield of the US Treasury bills? Use multiplicative form.
A5.58%
B 6.09%
C 5.06%
D 6.35%
E 5.32%
F 5.83%
Bonds X and Y are identical, including the risk class. The only difference between A and B is in th coupon payment as shown below
Bond X Bond Y
Face value $1,000 $1,000
Annual Coupon Payment $120 $130
Payment Frequency Semiannual Annual
Years to maturity 15 15
Price $919.43 ?
What is the price of bond Y?
A$925.88
B $940.92
C $1,007.15
D$956.95
E$973.44
F$989.75
