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1. Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.97 million

1. Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.97 million and create incremental cash flows of $552,213.00 each year for the next five years. The cost of capital is 11.33%. What is the profitability index for the J-Mix 2000?

Answer format: Number: Round to: 3 decimal places.

2. The yield to maturity for a 11.00 year STRIPS is 7.91%. If par value is $1,000. then it should sell for $_______.

Answer format: Currency: Round to: 2 decimal places.

3. The market price of a semi-annual pay bond is $992.54. It has 14.00 years to maturity and a coupon rate of 8.00%. Par value is $1,000. What is the yield to maturity?

Answer format: Percentage Round to: 4 decimal places (Example: 9.2434%, % sign required. Will accept decimal format rounded to 6 decimal places (ex: 0.092434))

4. Suppose the risk-free rate is 2.13% and an analyst assumes a market risk premium of 6.63%. Firm A just paid a dividend of $1.15 per share. The analyst estimates the of Firm A to be 1.27 and estimates the dividend growth rate to be 4.01% forever. Firm A has 297.00 million shares outstanding. Firm B just paid a dividend of $1.75 per share. The analyst estimates the of Firm B to be 0.87 and believes that dividends will grow at 2.75% forever. Firm B has 191.00 million shares outstanding. What is the value of Firm B?

Answer format: Currency: Round to: 2 decimal places.

5.

Suppose the risk-free rate is 2.47% and an analyst assumes a market risk premium of 6.03%. Firm A just paid a dividend of $1.02 per share. The analyst estimates the of Firm A to be 1.32 and estimates the dividend growth rate to be 4.08% forever. Firm A has 251.00 million shares outstanding. Firm B just paid a dividend of $1.99 per share. The analyst estimates the of Firm B to be 0.87 and believes that dividends will grow at 2.52% forever. Firm B has 188.00 million shares outstanding. What is the value of Firm A?

Answer format: Currency: Round to: 2 decimal places.

6.

The risk-free rate is 3.03% and the market risk premium is 5.80%. A stock with a of 1.46 just paid a dividend of $2.15. The dividend is expected to grow at 21.14% for five years and then grow at 4.38% forever. What is the value of the stock?

Answer format: Currency: Round to: 2 decimal places.

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