finance rmt

1. If the present value of $225 to be paid at the end of one year is $200, what is the one-year discount factor? Give your answer to the 4th decimal.

2. Given a monthly rate of 0.5%, what is the Effective Annual Rate (EAR)?

Find your answer in percentage terms, to the 2nd decimal.

Do not include % sign in your answer.

3. Jerome deposits $ 25,000 in a bank.

The bank pays him an annual interest rate of 5%, compounded quarterly.

How much will Jerome receive from the Bank at the end of 3 years.

Find your answer to the nearest dollar. Do not include $ sign or comma in your answer.

4. BlueArrow Inc forecasts to pay $4.00 dividend per share next year.

The expected return is 10%.

If the company is expected to pay the same rate of dividend, without any growth in earnings, what would be the current stock price?

Give your answer to the 2nd decimal.

Do not include $ sign or comma in your answer.

5. BlueArrow Inc forecasts to pay $4.00 dividend per share next year, which is expected to grow indefinitely at the rate of 6% a year.

If the expected return is 10%, what would be the current stock price?

Give your answer to the 2nd decimal.

Do not include$ sign or comma in your answer.

6. LinedOn Inc is expected to pay an end-of-year dividend of $ 4 per share.

After the Dividend its stock is expected to sell at $80.

The market capitalization rate is 5%.

What is the current stock price?

Give your answer to the 2nd decimal.

Do not include $ sign or comma in your answer.

7. The Earnings (Net Income) of Majorsoft Inc for the year ended 2012 was $500 million.

The number of equity shares outstanding at the end of 2012 is 125 million.

What is the Earnings per share (EPS) of the company?

Give your answer to the second decimal.

Do not include $ sign or comma in your answer.

8. Bleecham Inc has 12 million Equity shares outstanding.

Its Equity capital (par value) is $15 million and it has Retained earnings to the tune of $ 45 million.

What is the Book Value per share (BVps) of Bleecham?

Give your answer to the 2nd decimal.

Do not include $ sign or comma in your answer.

9. Fleur Inc has an EPS of $8 for the year 2012,

The Book Value per share of the company as at end 2012 was $80.

What is the Return on Equity (RoE) of the company?

Indicate RoE as a percentage, to the 2nd decimal.

Do not include % in your answer.

Eg., if your answer is 6.75%, give your answer as 6.75

10. Kilbern Inc has an Earnings per share (EPS) of $7.

It declares a Dividend per share (DPS) of $3.50.

What is the company’s Payout ratio (PoR)?

Give your answer in round percentage. Do not include % sign in your answer.

Eg.,if your answer is 32%, indicate as 32.

11. Prius Inc earns 10% Return on Equity (RoE).

It intends to ploughback 30% of its earnings into the company.

What is the sustainable Growth rate (SGR) of the company?

Calculate your answer in percentage terms to the 2nd decimal, but do not include% sign in your answer.

Eg., if your answer is 6.75%, just give your answer as 6.75.

12. If the present value of $250 expected 2 years from today is $200, what is the annualized discount rate? Find your answer in percentage terms to 2 decimals.

Do not include % sign in your answer.

Eg., if your answer is 23.50%, indicate your answer as 23.50.

13. The nominal interest rate is 7% and the inflation rate is 2%.

What is the real interest rate?

Find the interest rate to the 2nd decimal. Do not include % sign in your answer.

14. A capital equipment costing $500,000 today has a salvage value of $ 100,000 at the end of 4 years.

If straight-line depreciation is used, what is the book value of the equipment at the end of 3 years?

Indicate your answer in round dollars.

Do not include $ sign or comma in your answer.

15. ReadMart Inc is forecasted to pay dividends per share of $8.00, $ 8.50 and $ 9.00 in the next three years. At the end of the 3-year period, the stock is expected to be sold for $125.

If the discount rate is 7%, what is the expected price of the stock?

Give your answer to the 2nd decimal.

Do not include $ sign or comma in your answer.

16. A Bond has a Face Value of $100.

It offers an annual coupon of 2%.

It has residual life of 3 years.

The current interest rate prevalent in the economy is 4%?

What is the value of the Bond?

Give your answer to 2 decimals.

Do not include $ sign or comma in your answers.

17. Jugnaw Inc’s new project has the following Cash Flows:

Year 0 1 2 3

Investment ($) (12,000) 4,000 5,000 6,000

Calculate the NPV of the project by using a discount rate of 5%.

Round off the Answer to the nearest $.

Do not include $ sign or comma in your answer.

18. A company has 4 projects to choose from.

However, it has a budget constraint of $ 350,000.

If it chooses Projects A and B, what would be the Weighted Average Profitability Index (WAPI)?

Give your answer to 2 decimals.

Project NPV ($) Investment ($)

A 2,30,000 2,00,000

B 1,42,500 1,25,000

C 1,62,400 1,40,000

D 1,69,500 1,50,000

19. You agree to lease a car for 5 years by paying $300 per month.

You are not required to pay any money up front or at the end of your agreement.

Your opportunity cost of capital is 0.5% per month.

What is the cost of the lease (Present Value)?

Round your answer to the nearest $.

Do not include $ sign or comma in your answer.