Cavo Corp. has 9 percent coupon bonds making annual payments with a YTM of 8.3 percent. The current yield on these bonds is 8.65 percent.

How many years do these bonds have left until they mature? (Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16).)

Maturity of bond

years

The Morgan Corporation has two different bonds currently outstanding. Bond M has a face value of $20,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $2,300 every six months over the subsequent eight years, and finally pays $2,600 every six months over the last six years. Bond N also has a face value of $20,000 and a maturity of 20 years; it makes no coupon payments over the life of the bond. The required return on both these bonds is 12 percent compounded semiannually.

What is the current price of bond M and bond N? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

	Current price
Bond M	$
Bond N	$

The Starr Co. just paid a dividend of $1.90 per share on its stock. The dividends are expected to grow at a constant rate of 6 percent per year indefinitely. Investors require a return of 10 percent on the company's stock.

What is the current stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Current price

$

What will the stock price be in three years? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Stock price

$

What will the stock price be in 5 years? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Stock price

$

The next dividend payment by ZYX, Inc., will be $1.88 per share. The dividends are anticipated to maintain a growth rate of 4 percent forever. If the stock currently sells for $37 per share, what is the required return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

Required return

%

Oberholser, Inc., has an issue of preferred stock outstanding that pays a dividend of $6.75 every year in perpetuity. If this issue currently sells for $93 per share, what is the required return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

Required return

%

Consider two mutually exclusive new product launch projects that Nagano Golf is considering. Assume the discount rate for both projects is 9 percent.

Project A:	Nagano NP-30.
	Professional clubs that will take an initial investment of $870,000 at Time 0. Introduction of new product at Year 6 will terminate further cash flows from this project.

Project B:	Nagano NX-20.
	High-end amateur clubs that will take an initial investment of $619,000 at Time 0. Introduction of new product at Year 6 will terminate further cash flows from this project.

Year	NP-30			NX-20
0	$	870,000		$	619,000
1		329,000			246,000
2		319,000			248,000
3		294,000			236,000
4		281,000			216,000
5		191,000			170,000

Complete the following table: (Do not round intermediate calculations. Enter the IRR as a percent. Round your profitability index (PI) answers to 3 decimal places (e.g., 32.161) and other answers to 2 decimal places (e.g., 32.16).)

	NP-30			NX-20
NPV	$			$
IRR		%			%
PI

What is the incremental IRR of investing in the larger project? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

Incremental IRR	%
Consider two mutually exclusive R&D projects that ADM is considering. Assume the discount rate for ADM is 8 percent.

Project A:	Server CPU .13 micron processing project
	By shrinking the die size to .13 micron, ADM will be able to offer server CPU chips with lower power consumption and heat generation, meaning faster CPUs.

Project B:	New telecom chip project
	Entry into this industry will require introduction of a new chip for cell phones. The know-how will require a large amount of up-front capital, but success of the project will lead to large cash flows later on.

Year	Project A			Project B
0	$	655,000		$	855,000
1		330,000			245,000
2		340,000			345,000
3		250,000			350,000
4		175,000			395,000
5		110,000			480,000

Complete the following table: (Do not round intermediate calculations. Enter the IRR as a percent. Round your profitability index (PI) answers to 3 decimal places (e.g., 32.161) and other answers to 2 decimal places (e.g., 32.16).)

	Project A			Project B
NPV	$			$
IRR		%			%
PI

What is the incremental IRR of investing in the larger project? (Do not round intermediate calculations. Enter your answer as a percent and round your answer to 2 decimal places (e.g., 32.16).)

Incremental IRR

%