23.

Suppose you can borrow money at 9.28% per year (APR) compounded semiannually or 9.89% per year (APR) compounded monthly.

a.	Calculate the Effective Annual Rate. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

	Effective Annual Rate
9.28%	%
9.89%	%

b.	Which is the better deal?
	multiple choice APR compounded monthly. APR compounded semiannually.

24.

If you take out an $42,000 car loan that calls for 72 monthly payments starting after 1 month at an APR of 16.50%, what is your monthly payment? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Monthly payment

$

b.	What is the effective annual interest rate on the loan? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Effective annual interest rate

%

25.

A project that costs $813,353.95 to install will provide annual cash flows of $184,000.00 for each of the next 9 years.

a.	Calculate the NPV if the discount rate is 26.60%? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

NPV

$

b.	Is this project worth pursuing?
	multiple choice No Yes

c.	How high can the discount rate be before you would reject the project (i.e. What is the projects IRR)? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Discount rate

%

26.

Marielle Machinery Works forecasts the following cash flows on a project under consideration. It uses the internal rate of return rule to accept or reject projects.

	C0		C1		C2		C3
		$	10,900			0			+	$	8,400		+	$	9,400

Calculate the IRR. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

IRR

%

Should this project be accepted if the required return is 13%?

multiple choice

Yes

No

29.

Planned Obsolescence has a product that will be in vogue for six years, at which point the firm will close up shop and liquidate the assets. As a result, forecast dividends are DIV₁ = $2, DIV₂ = $4.25, and DIV₃ = $1.75,DIV₄ = $4.25,DIV₅ = $4.25,DIV₆ = $4.75. What is the expected stock price in year 3 if the discount rate is 9.5%? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Stock price in year 3

$

What is the price an investor is willing to spend on the stock if the investor plans to hold the stock for three years?

Today's stock price