21. Atlas Inc. issued a 30-year bond with an annual coupon rate of 10 percent. The bond has a par value of $1,000 and interest is paid semiannually. If the bond is currently traded at $1,296.72, what is its yield to maturity?

7.5 percent

5.0 percent

6.5 percent

4.5 percent

9.0 percent

22.You got an approval for an auto loan, which must be repaid in 60 equal payments made at the end of each month. Given the annual interest rate of 5.5 percent, your monthly payment amount will be $553.93. What is the total amount you are borrowing today?

$25,200

$26,100

$29,000

$28,000

$27,500

23.Ernst Electricals common stock was sold for $48.25 per share and incurred flotation cost equal to 5 percent of the issue price. The stock paid dividends of $1.25 per share yesterday and the dividends are expected to grow at a constant rate of 10 percent per year. If the firms corporate tax rate is 34 percent, what is the firms cost of external equity?

12.85 percent

13.95 percent

14.15 percent

13.00 percent

13.60 percent

24.Suppose the spot exchange rate between the U.S. dollar and the British pound is $1.20/ at the beginning of 2017. The exchange rate at the end of 2017 is expected to be $1.24/ while the annual inflation rate in the U.S. is expected to be 5 percent during 2017. If the relative purchasing power parity holds, what is the inflation rate in U.K. implied for the year?

2.51 percent

3.52 percent

1.67 percent

5.02 percent

6.67 percent

26. Wings and More is considering a 3-year project. The straight line depreciation method is applied to all the fixed assets necessary for this project. What is the net salvage cash flow from the sale of the fixed assets when this project is over?

$120,000

$140,000

$200,000

$180,000

$160,000

27.Midtown Enterprises borrowed $100,000 for 5 years at a 12 percent interest rate, compounded monthly, and makes an equal amount of payment at the end of each month. How much principal payment is the firm making during the 2nd year?

$11,164

$15,447

$17,498

$13,420

18,970

29.Madden Corporation recently purchased fixed assets for $150,000 and they are classified as 5-year property for MACRS. The corporate tax rate is 34 percent. What is the book value remaining after two years?

$96,000

$57,600

$72,000

$85,210

$45,220

30.Financial researchers have suggested that capital markets are weak-form efficient because the stock price returns are believed to be _________.

abnormally cumulated

serially correlated

ordinary collaborated

normally cumulated

serially uncorrelated

Initial investment Annual sales Annual operating costs Initial increase in NWC Resale value Tax rate Discount Rate S 300,000 S 1,200,000 S 500,000 S 300,000 S 200,000 30% 10% 1 Year 0 Year 1 Year 2 Year 3 Initial investment Revenue Operating costs Depreciation EBT Tax Net Income 300,000 1.200,0001,200,000 500,000 1.200,000 500,000 500,000 600,000 180,000 420,000 600,000 180,000 420,000 600,000 180,000 420,000 Operating cash flow Net capital Spending 520,000 520,000 2 (300,000) 300,000 (600,000) 300,000 Incremental cash flow 520,000 520,000