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

31.With _____ coupon rate, a bonds price sensitivity tends to increase, ceteris paribus. With _____ maturity, a bonds price sensitivity tends to increase, ceteris paribus.

lower; longer

higher; shorter

lower; shorter

higher; longer

zero; no

32.Suppose that investors have not been able to earn excess returns using newly released announcements about the firms. Based on this statement only, which of the following must be correct?

Markets are at least weak-form and semi-strong-form efficient.

Markets are semi-strong-form efficient, but not weak-form efficient.

Markets are semi-strong-form efficient, but not weak-form efficient.

Markets are definitely strong-form efficient.

Markets are weak-form efficient, but not semi-strong-form efficient.

33.When a countrys currency depreciates relative to other currencies, domestic goods become ______ for ______ buyers.

more expensive; domestic

absolutely free; all

more expensive; foreign

cheaper; domestic

cheaper; foreign

34.What is the geometric average of the returns during Period 1 through Period 6?

0.0941

0.1302

0.1251

0.1152

0.1080

35.You have $0 in your bank account today and have decided to start depositing every month for your after-retirement life. You just turned 30 years old and would like to able to withdraw $20,000 at the beginning of each month for 20 years after your 60th birthday. How much will you need to deposit into his account at the end of each month, starting one month from today and ending on his 60th birthday? You bank account earns 12 percent annual interest, compounding monthly, both before and after his retirement.

$423.51

$524.91

$285.27

$336.55

$556.33

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