1-Given the following cash flows, calculate the payback period:

Year	CF
0	-921
1	368
2	253
3	291
4	784

2- A stock just paid a dividend of D0 = $3.4. The required rate of return is rs = 15.8%, and the constant growth rate is g = 3%. What is the current stock price?

a. $35.76

b. $24.469

c. $3.45

d. $27.359

3- What is the effective rate of 18% compounded monthly?

a. 26.97%

b. 13.56%

c. 17.46%

d. 19.56%

4- ABC is reviewing a project that will cost $1,431.The project will produce cash flows $210 at the end of each year for the first two years and $772 at the end of each year for the next two years. What is the profitability index? Assume interest rate is 4%.

a. 1.56

b. 0.95

c. 1.22

d. 2.56

5- Suppose an investment offers to double your money in 39 years. What annual rate of return are you being offered if interest is compounded semi-annually?

a. 1.79%

b. 1.56%

c. 0.98%

d. 0.89%

6- How many years will it take to quadruple (i.e. 4 times) your money at 9% compounded quarterly?

a. 7.2424

b. 15.5759

c. 5.6478

d. 3.3168

7- The principal amount of a bond that is repaid at the end of term is called the par value or the:

a. call premium

b. perpetuity value

c. face value

d. back-end value

e. coupon value

8- A bond that sells for less than face value is called as:

a. discount bond

b. premium bond

c. par value bond

d. debenture

e. perpetuity

9- ABC Corp. just paid a dividend of $2.4 per share at the end of the year. The stock has a required rate of return is 18%. The dividend is expected to grow at 6.9%. What is dividend at time = 8? (solve for D8?)

a. $7.667

b. $3.175

c. $6.451

d. $4.093

10- An investment is acceptable if the profitability index (PI) of the investment is:

a. less than the net present value (NPV).

b. less than one.

c. greater than one.

d. greater than the internal rate of return (IRR).

e. greater than a pre-specified rate of return.