Colby & Company bonds pay semiannual interest of $50. They mature in 15 years and have a par value of $1,000. The market rate of interest is 8%. The market value of Colby bonds is (round to the nearest dollar)

$1,173.

$743.

$1,000.

$827.

What is the expected rate of return on a bond that matures in seven years, has a par value of $1,000, a coupon rate of 14%, and is currently selling for $911? Assume annual coupon payments.

7.81%

15.36%

15.61%

16.22%

What is the expected rate of return on a bond that pays a coupon rate of 9% paid semi-annually, has a par value of $1,000, matures in five years, and is currently selling for $1071?

7.28%

8.40%

3.64%

4.21%

Butler, Inc.'s return on equity is 17% and management retains 75% of earnings for investment purposes. Based on this information, what will be the firm's growth rate?

4.25%

22.67%

44.12%

12.75%

Marshall Manufacturing has common stock which paid a dividend of $1.00 a share last year. You expect the stock to grow at 5% per year. If the appropriate rate of return on this stock is 12%, how much are you willing to pay for the stock today?

$13.00

$15.00

$17.00

$19.00

UVP preferred stock pays $5.00 in annual dividends. If your required rate of return is 13%, how much will you be willing to pay for one share?

$26.26

$38.46

$65.46

$46.38

ABC Service can purchase a new assembler for $15,052 that will provide an annual net cash flow of $6,000 per year for five years. Calculate the NPV of the assembler if the required rate of return is 12%. (Round your answer to the nearest $1.)

$1,056

$4,568

$6,577

$7,621

Fitchminster Armored Car can purchase a new vehicle for $200,000 that will provide annual net cash flow over the next five years of $40,000, $40,000, $50,000, $50,000, $60,000. Calculate the NPV of the vehicle if the required rate of return is 9%. (Round your answer to the nearest $1.)

$6,048

$6,780

$16,609

$19,483

Your company is considering a project with the following cash flows:

Initial outlay = $1,748.80; Cash flows Years 1-6 = $500; Compute the IRR on the project.

18%

9%

11%

24%

Below are the expected after-tax cash flows for Projects Y and Z. Both projects have an initial cash outlay of $20,000 and a required rate of return of 17%.

Project YProject Z

Year 1$12,000$10,000

Year 2$8,000$10,000

Year 3$6,0000

Year 4$2,0000

Payback for Project Y is

two years.

one year.

three years.

four years.

1. Colby & Company bonds pay semiannual interest of $50. They mature in 15 years and have a par value of $1,000. The market rate of interest is 8%. The market value of Colby bonds is (round to the nearest dollar) A) $1,173. B) $743. C) $1,000. D) $827. 2. What is the expected rate of return on a bond that matures in seven years, has a par value of $1,000, a coupon rate of 14%, and is currently selling for $911? Assume annual coupon payments. A) 7.81% B) 15.36% C) 15.61% D) 16.22% 3. What is the expected rate of return on a bond that pays a coupon rate of 9% paid semi-annually, has a par value of $1,000, matures in five years, and is currently selling for $1071? A) 7.28% B) 8.40% C) 3.64% D) 4.21% 4. Butler, Inc.'s return on equity is 17% and management retains 75% of earnings for investment purposes. Based on this information, what will be the firm's growth rate? A) 4.25% B) 22.67% C) 44.12% D) 12.75% 5. Marshall Manufacturing has common stock which paid a dividend of $1.00 a share last year. You expect the stock to grow at 5% per year. If the appropriate rate of return on this stock is 12%, how much are you willing to pay for the stock today? A) $13.00 B) $15.00 C) $17.00 D) $19.00 6. UVP preferred stock pays $5.00 in annual dividends. If your required rate of return is 13%, how much will you be willing to pay for one share? A) $26.26 B) $38.46 C) $65.46 D) $46.38 7. ABC Service can purchase a new assembler for $15,052 that will provide an annual net cash flow of $6,000 per year for five years. Calculate the NPV of the assembler if the required rate of return is 12%. (Round your answer to the nearest $1.) A) $1,056 1 B) $4,568 C) $6,577 D) $7,621 8. Fitchminster Armored Car can purchase a new vehicle for $200,000 that will provide annual net cash flow over the next five years of $40,000, $40,000, $50,000, $50,000, $60,000. Calculate the NPV of the vehicle if the required rate of return is 9%. (Round your answer to the nearest $1.) A) $6,048 B) $6,780 C) $16,609 D) $19,483 9. Your company is considering a project with the following cash flows: Initial outlay = $1,748.80; Cash flows Years 1-6 = $500; Compute the IRR on the project. A) 18% B) 9% C) 11% D) 24% 10. Below are the expected after-tax cash flows for Projects Y and Z. Both projects have an initial cash outlay of $20,000 and a required rate of return of 17%. Year 1 Year 2 Year 3 Year 4 Project Y Project Z $12,000 $10,000 $8,000 $6,000 $2,000 $10,000 0 0 Payback for Project Y is A) two years. B) one year. C) three years. D) four years. 2