Calculations Shown In Excel file

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