5.	What is the present value of a perpetuity of $2,900 per year at a discount rate of 11% per year?
	a)	$31,900
	b)	$26,364
	c)	$29,264
	d)	$23,751
	e)	The present value of this perpetuity is infinitely large.

6.	Wyoming Mining Group stock does not now pay dividends. Investors expect that it will begin paying a dividend of $0.50/share in exactly 5 years at time 5. That is, they forecast that D5 will be $0.50/share. Investors expect that the dividend will then remain at that level of $0.50/share forever after that. They require a return of 11.00% on this stock. What is the value of this stock today based on the discounted dividend model?
	a)	$3.32
	b)	$2.99
	c)	$2.70
	d)	$4.10
	e)	$4.55

7.	What is the EAR of 18% compounded semi-annually?
	a)	18.810%
	b)	19.562%
	c)	18.000%
	d)	19.722%
	e)	19.252%

8.	Desert Camping Equipment just paid a dividend, D0, of $0.90/share on its common stock. Investors expect that its dividend will grow at a constant rate of 4% per year, and they require a return of 15% on this stock. What is the value of this stock based on the discounted dividend model?
	a)	$0.87
	b)	$6.00
	c)	$8.18
	d)	$6.24
	e)	$8.51

9.	The future value of regular annuity of $5,000 per year for 20 years is $165,329.77. What interest rate is implied?
	a)	4.44%
	b)	5.00%
	c)	8.40%
	d)	3.75%
	e)	7.20%

10.	A zero coupon bond will mature in 10 years and pay its face value of $1,000. Its current market value is $740. What is its implicit yield to maturity based on semi-annual compounding?
	a)	2.60%
	b)	35.14%
	c)	26.00%
	d)	3.057%
	e)	1.52%

11.	Find the present value of $3,800 to be received 5 years from today. The discount rate is 8%.
	a)	$5,583.45
	b)	$2,844.84
	c)	$2,586.22
	d)	$3,491.39
	e)	$3,800.00

12.	United Metal Fabrication stock currently sells in the market for $50.00/share. It just paid a dividend of $6.00/share. Investors expect that the dividend will decline at a constant rate of 4% per year in the future. That is, the expected growth rate g is -4%. What rate of return do investors require on this stock?
	a)	16.48%
	b)	8.00%
	c)	8.48%
	d)	15.52%
	e)	7.52%

13.	A year ago, an investor purchased 100 shares of Desert Camping Equipment preferred stock at a price of $38.00/share. The firm has just paid its annual dividend of $3.00. Now the share is priced at $31.16 in the market. What is the dividend yield of the stock based on its current price?
	a)	8.37%
	b)	9.63%
	c)	27.63%
	d)	18.00%
	e)	7.89%

14.	Today an investor will pay $3,000 for a security that will return $12,875.61 in exactly 25 years. What annual rate of return will he receive on this investment?
	a)	4.80%
	b)	6.00%
	c)	329.19%
	d)	76.70%
	e)	6.90%

15.	One year ago you purchased a zero coupon bond and paid $525 for it. It now has 5 years remaining to maturity, and its yield to maturity is 8%. Its face value is $1,000. Find the change in dollar value of the bond in this period. Use semi-annual compounding.
	a)	$944.33
	b)	$602.79
	c)	$680.58
	d)	$155.58
	e)	$150.56

16.	You are offered an investment that will pay you an annual perpetuity. The amount you must pay now to purchase the investment is $283,000. You expect to receive a return of 8% on the investment. What annual payment will you receive on this investment?
	a)	$24,451.20
	b)	$20,962.96
	c)	$27,168.00
	d)	$18,112.00
	e)	$22,640.00

17.	Amy's Home Crafts Corporation's bonds have a face value of $1,000 and a 10% coupon paid semiannually; the bonds mature in 5 years. What current yield would be reported in The Wall Street Journal if the yield to maturity is 9%?
	a)	4.8097%
	b)	9.6194%
	c)	1.1687%
	d)	0.9619%
	e)	1.4620%

18.	Find the present value of $2,500 to be received 15 years from today. The discount rate is 10% per year compounded monthly
	a)	$598.48
	b)	$617.43
	c)	$757.76
	d)	$2,207.39
	e)	$561.30

19.	What is the future value of an annuity due of $1,000 per year for 10 years if the interest rate is 23% per year?
	a)	$4,673
	b)	$30,113
	c)	$10,000
	d)	$37,039
	e)	$3,799

20.

You are evaluating a capital project, and have projected these cash flows:

Year	Projected Cash Flow
1	$400
2	$300
3	$300
4	$100

You will discount the expected cash flows at a rate of 14%. What is the total present value of the project's cash flows?

a)

$350.88

b)

$230.84

c)

$784.21

d)

$843.42

e)

$202.49

21.	You are considering an investment that will return $12,000 in exactly 14 years. The discount rate is 10% per year with continuous compounding/discounting. What is the present value of this investment?
	a)	$2,690
	b)	$2,515
	c)	$48,662
	d)	$3,255
	e)	$2,959

22.	One year ago you purchased a zero coupon bond and paid $530 for it. It now has 5 years remaining to maturity, and its yield to maturity is 8%. Its face value is $1,000. Find the change in dollar value of the bond in this period. Use annual compounding.
	a)	$680.58
	b)	$605.29
	c)	$150.58
	d)	$150.58
	e)	$939.33

23.	What is the future value of regular annuity of $9,000 per year for 5 years if the interest rate is 17% per year?
	a)	$53,957
	b)	$33,689
	c)	$105,948
	d)	$63,130
	e)	$28,794

24.	United Metal Fabrication has some bonds outstanding, currently with 20 years remaining to maturity. The coupon rate is 6%, and the interest is paid monthly. The face value of the bonds is $1,000. How much interest must the firm pay on each outstanding bond each month?
	a)	$60.00
	b)	$5.00
	c)	$20.00
	d)	$15.00
	e)	$30.00