1. Summit Systems will pay a dividend of $1.50 next year. If you expect Summits dividend to grow by 6% per year, what is its price per share if the required return of equity is 11%?

A) The price per share is $31.80.

B) The price per share is $25.

C) The price per share is $13.63.

D) The price per share is $30.

2. An investment should be accepted if the

Term 1

net present value, payback period, positive, negative

is

Term 2

net present value, payback period, positive, negative

and rejected if it is

Term 3

net present value, payback period, positive, negative.

3. What is the effective annual interest rate corresponding to a nominal interest rate of 7.5% per annum, compounding daily (assume 365 days in a year)?

A) The effective annual interest rate is 7.5%.

B) The effective annual interest rate is 8.10%.

C) The effective annual interest rate is 7.79%.

D) The effective annual interest rate is 7.46%.

4. There is the possibility of conflicts between

Term 1

customers, shareholders, employees, management, agency, principal

and

Term 2

customers, shareholders, employees, management, agency, principal,

who hire the former to represent their interests in a large corporation. Such a conflict is called a(n)

Term 3

customers, shareholders, employees, management, agency, principal

problem.

5. Dewyco has preference stock trading at $50 per share. The next preference dividend of $4 is due in one year. What is Dewycos cost of capital for preference share?

A) The cost for Dewycos preference share is 12.5% per annum.

B) The cost for Dewycos preference share is 9% per annum.

C) The cost for Dewycos preference share is 20% per annum.

D) The cost for Dewycos preference share is 8% per annum.