15 Marks] Question 2 Four grandfather put some money in an account for you on the day you were bom. To now 18 years old and are allowed to withdraw the money for the first time. The account pays a 12% interest rate per year (EAR) and currently has $4,200 in it. a) How much money would be in the account if you leave the money there until your 25th birthday? b) How much money did your grandfather originally put in the account? Question 3 15 Marks The risk-free rate is 5%, and the expected return of the market portfolio is 10%. Assuming stock has a beta of 1.5, what is the expected return (required return of this stock based on capital asset pricing model? Question 4 15 Marks Young Pharmaceuticals is considering a drug project that costs $3.8 million today and is expected to generate constant annual cash flow of $267.000 that continues indefinitely, with the first cash flow arriving in one year from today. At what discount rate would Young be indifferent between accepting or rejecting the project? Question 5 [10 Marks) You notice that PepsiCo (PEP) has a stock price of $72.62 and earnings per share (EPS) of $3.93. Its competitor, the Coca-Cola Company (KO), has EPS of $2.13. Estimate the value of a share of Coca-Cola stock using only this data. Question 6 [10 Marks A stock has had returns of 24 percent, 12 percent, 38 percent, -2 percent, and 21 percent over the last five years. What is the geometric return for the stock? Question 7 [10 Marks) Suppose a five-year bond with face value of $1000 and annual coupons has a price of $990 and a yield to maturity of 6%. What is the bond's coupon rate? Question 8 [10 Marks] You have a loan outstanding. It requires making twenty annual payments at the end of the next twenty years of $4000 each (t=1 to 1=20). Your bank has offered to restructure the loan so that instead of making twenty payments as originally agreed, you will make only a one-time payment in twenty five years (1-25). If the interest rate on the loan is 5%, what one-time payment will the bank require you to make so that it is indifferent between the two forms of payment