due in 2 5 hours QUESTION 1 What is the internal rate of return (IRR) of this project given the following cash flows Year CF 0 $2,200 1 $ 900 2 $ 800 3 $ 600 4 $ 700 5 $1,090 Enter your answer rounded off to two decimal points Do not enter in the answer box For example, if your answer is 12 345 then enter as 12 35 in the answer box 1 points QUESTION 2 ABC Company has $1,000 face value bonds outstanding These bonds pay interest semiannually, mature in 12 years, and have a 8 5 percent coupon The current price of the bond is $1020 What is the yield to maturity Enter yur answer in percentages rounded off to two decimal points Do not enter in the answer box 1 points QUESTION 3 A project requires $21,703 of equipment that is classified as a 7 year property What is the depreciation expense in Year 5 given the following MACRS depreciation allowances, starting with year one 14 29, 24 49, 17 49, 12 49, 8 93, 8 92, 8 93, and 4 46 percent Enter your answer rounded off to two decimal points Do not enter $ or comma in the answer box For example, if your answer is $12 345 then enter as 12 35 in the answer box 1 points QUESTION 4 Systematic risk is measured by beta covariance correlation coefficient standard deviation variance 1 points QUESTION 5 The square root of the variance is covariance standard deviation half variance beta correlation coefficient 1 points QUESTION 6 A sunk cost is an opportunity cost a cost that is recovered at the start of the project depreciated to zero balance over the life of the project a cost that has already been incurred a cost that is recovered at the end of the project 1 points QUESTION 7 If markets are efficient, the difference between the instrinsic value and the market value of the comapny's security is negative positive zero 1 points QUESTION 8 Project A requires an initial investment of $9,000 at t 0 Project A has an expected life of 2 years with after tax cash inflows of $6,000 and $8,500 at the end of Years 1 and 2, respectively The project has a required return of 11 What is the equivalent annual annuity Enter your answer rounded off to two decimal points 1 points QUESTION 9 ABC Company is considering a new project The project is expected to generate annual sales of $92,338, variable costs of $25,594, and fixed costs of $14,794 The depreciation expense each year is $15,810 and the tax rate is 29 percent What is the annual operating cash flow Enter your answer rounded off to two decimal points Do not enter $ or comma in the answer box For example, if your answer is $12 345 then enter as 12 35 in the answer box 1 points QUESTION 10 Five years ago, ABC Company invested $53,828 in a machinery The investment in net working capital was $7,704 which would be recovered at the end of the project Today, ABC Company is selling the machinery for $17,364 The book value of the machinery is $21,537 The tax rate is 39 percent What are the terminal cash flows in Year 5 Enter your answer rounded off to two decimal points Do not enter $ or comma in the answer box For example, if your answer is $12 345 then enter as 12 35 in the answer box 1 points QUESTION 11 A project has an initial requirement of $90,519 for equipment The equipment will be depreciated to a zero book value over the 5 year life of the project The investment in net working capital will be $16,885 All of the net working capital will be recouped at the end of the 5 years The equipment will have an estimated salvage value of $17,900 The annual operating cash flow is $54,779 The cost of capital is 13 percent What is the projects net present value if the tax rate is 23 percent Enter your answer rounded off to two decimal points Do not enter $ or comma in the answer box For example, if your answer is $12 345 then enter as 12 35 in the answer box 1 points QUESTION 12 You have a $64,643 portfolio that consists of $14,796 invested in Stock A, $20,372 invested in Stock B, $4,979 invested in Stock C, and the remainder in Stock D The portfolio has a return of 17 1 percent The return for Stock A is 15 2 percent, for Stock B is 25 3 percent, and for Stock C is 11 6 percent What is the return for Stock D Enter your answer as a percentage rounded off to two decimal points Do not enter in the answer box For example, if your answer is 12 345 then enter as 12 35 in the answer box z 1 points QUESTION 13 Over the past six years, a stock had annual returns of 10 percent, 5 percent, 7 percent, 8 percent, 2 percent, and 11 percent, respectively What is the standard deviation of these returns Enter your answer as a percentage rounded off to two decimal points Do not enter in the answer box For example, if your answer is 12 345 then enter as 12 35 in the answer box 1 points QUESTION 14 ABC Company is considering an investment that will cost the company $574 at time 0 The after tax cash flows are expected to be $81 each year for 8 years What is the payback period Enter your answer rounded off to two decimal points 1 points QUESTION 15 Suppose the nominal rate is 15 19 and the inflation rate is 8 37 Solve for the real rate Use the Fisher Effect formula Note Enter your answer in percentages rounded off to two decimal points Do not enter in the answer box For example, if your answer is 0 12345 then enter as 12 35 in the answer box 1 points QUESTION 16 What is the project's initial investment outlay based on the following information The machinery could be purchased for $39,450 Shipping and installation costs would cost another $6,612 The project would require an initial investment in net working capital of $4,247 The company's tax rate is 30 Enter your answer rounded off to two decimal points Do not enter $ or comma in the answer box For example, if your answer is $12 345 then enter as 12 35 in the answer box 1 points QUESTION 17 One year ago, you puchased 175 shares of ABC stock for $43 77 per share During the year, you receiveda dividend of $5 66 per share Today, you sold all your shares for$54 34 What are the percentage return on your investment Note Enter your answer in percentages rounded off to two decimal points Do not enter in the answer box For example, if your answer is 0 12345 then enter as 12 35 in the answer box 1 points QUESTION 18 What is the Profitability Index (PI) of this project if the required rate is 6 Year CF 0 $3,733 1 $1,153 2 $474 3 $2,192 4 $768 5 $853 Enter your answer rounded off to two decimal points For example, if your answer is 12 345 then enter as 12 35 in the answer box 1 points QUESTION 19 ABC Inc is considering an investment of $1,171 million with after tax cash inflows of $323 million per year for six years and an additional after tax salvage value of 88 million in Year 6 The required rate of return is 5 What is the investments Profitability Index (PI) Enter your answer rounded off to two decimal points 1 points QUESTION 20 ABC Company purchased a new machinery 4 years ago for $60,027 Today, it is selling this equipment for $13,345 What is the after tax salvage value if the tax rate is 29 percent The MACRS allowance percentages are as follows, commencing with year one 20 00, 32 00, 19 20, 11 52, 11 52, and 5 76 percent Enter your answer rounded off to two decimal points Do not enter $ or comma in the answer box For example, if your answer is $12 345 then enter as 12 35 in the answer box 1 points QUESTION 21 What is the NPV of this project if the required rate is 22 Year CF 0 $1,707 1 $976 2 $504 3 $1,485 Enter your answer rounded off to two decimal points Do not enter $ or comma in the answer box For example, if your answer is $12 345 then enter as 12 35 in the answer box 1 points QUESTION 22 A 12 year project is expected to generate annual sales of $204,090, variable costs of $48,352, and fixed costs of $36,067 The annual depreciation is $28,204 and the tax rate is 37 percent What is the annual operating cash flow Enter your answer rounded off to two decimal points Do not enter $ or comma in the answer box For example, if your answer is $12 345 then enter as 12 35 in the answer box 1 points QUESTION 23 Based on the following information, what is the portfolio beta Stock Value Beta A $22,665 3 46 B $23,061 1 92 C $11,694 0 12 D $20,988 2 74 Enter your answer rounded off to two decimal points For example, if your answer is 12 345 then enter as 12 35 in the answer box 1 points QUESTION 24 The risk free rate is 5 7 , the market risk premium is 11 6 , and the stocks beta is 0 9 What is the required rate of return on the stock, E(Ri) Use the CAPM equation Note Enter your answer rounded off to two decimal points Do not enter in the answer box For example, if your answer is 0 12345 then enter as 12 35 in the answer box 1 points QUESTION 25 You have invested $51,193 portfolio in three securities The three securities comprise of the risk free asset, Stock A, and Stock B The beta of stock A is 2 3 while the beta of stock B is 0 7 25 of the portfolio is invested in the risk free security What is the dollar amount invested in stock B if the beta of the portfolio is 1 2 Enter your answer rounded off to two decimal points Do not enter $ or comma in the answer box For example, if your answer is $12 345 then enter as 12 35 in the answer box 1 points QUESTION 26 A 7 2 bond has a maturity of 15 years The par value of the bond is $1,000 If the yield to maturity is 5 3 and the interest payments are made semi annually, then what is the current price of the bond Enter your answer rounded off to two decimal points 1 points QUESTION 27 ABC has issued a $1000 par bond with 15 years to maturity The bond is currently quoted at 107 8 of par value The bond pays a semi annual coupon of $63, and a maturity of five years What is the current yield Enter your answer as a percentage rounded off to TWO decimal points

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jun 10, 2024

due in 2.5 hours QUESTION 1 What is the internal rate of return (IRR) of this project given the following cash flows? Year CF 0

due in 2.5 hours QUESTION 1

What is the internal rate of return (IRR) of this project given the following cash flows?

Year CF 0 -$2,200 1 $ 900 2 $ 800 3 $ 600 4 $ 700 5 $1,090 Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 12.345% then enter as 12.35 in the answer box.

1 points

QUESTION 2

ABC Company has $1,000 face value bonds outstanding. These bonds pay interest semiannually, mature in 12 years, and have a 8.5 percent coupon.The current price of the bond is $1020. What is the yield to maturity?

Enter yur answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

1 points

QUESTION 3

A project requires $21,703 of equipment that is classified as a 7-year property. What is the depreciation expense in Year 5 given the following MACRS depreciation allowances, starting with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent? Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 4

Systematic risk is measured by:

beta

covariance

correlation coefficient

standard deviation

variance

1 points

QUESTION 5

The square-root of the variance is:

covariance

standard deviation

half-variance

beta

correlation coefficient

1 points

QUESTION 6

A sunk cost is:

an opportunity cost.

a cost that is recovered at the start of the project.

depreciated to zero balance over the life of the project.

a cost that has already been incurred.

a cost that is recovered at the end of the project.

1 points

QUESTION 7

If markets are efficient, the difference between the instrinsic value and the market value of the comapny's security is:

negative

positive

zero

1 points

QUESTION 8

Project A requires an initial investment of $9,000 at t = 0. Project A has an expected life of 2 years with after-tax cash inflows of $6,000 and $8,500 at the end of Years 1 and 2, respectively. The project has a required return of 11%. What is the equivalent annual annuity?

Enter your answer rounded off to two decimal points.

1 points

QUESTION 9

ABC Company is considering a new project. The project is expected to generate annual sales of $92,338, variable costs of $25,594, and fixed costs of $14,794. The depreciation expense each year is $15,810 and the tax rate is 29 percent. What is the annual operating cash flow?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 10

Five years ago, ABC Company invested $53,828 in a machinery. The investment in net working capital was $7,704 which would be recovered at the end of the project. Today, ABC Company is selling the machinery for $17,364. The book value of the machinery is $21,537. The tax rate is 39 percent. What are the terminal cash flows in Year 5?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 11

A project has an initial requirement of $90,519 for equipment.The equipment will be depreciated to a zero book value over the 5-year life of the project.The investment in net working capital will be $16,885.All of the net working capital will be recouped at the end of the 5 years.The equipment will have an estimated salvage value of $17,900. The annual operating cash flow is $54,779. The cost of capital is 13 percent. What is the projects net present value if the tax rate is 23 percent?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 12

You have a $64,643 portfolio that consists of $14,796 invested in Stock A, $20,372 invested in Stock B, $4,979 invested in Stock C, and the remainder in Stock D. The portfolio has a return of 17.1 percent. The return for Stock A is 15.2 percent, for Stock B is 25.3 percent, and for Stock C is 11.6 percent. What is the return for Stock D?

Enter your answer as a percentage rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 12.345% then enter as 12.35 in the answer box.z

1 points

QUESTION 13

Over the past six years, a stock had annual returns of 10 percent, 5 percent, 7 percent, 8 percent, 2 percent, and -11 percent, respectively. What is the standard deviation of these returns?

Enter your answer as a percentage rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 12.345% then enter as 12.35 in the answer box.

1 points

QUESTION 14

ABC Company is considering an investment that will cost the company $574 at time=0. The after-tax cash flows are expected to be $81 each year for 8 years. What is the payback period?

Enter your answer rounded off to two decimal points.

1 points

QUESTION 15

Suppose the nominal rate is 15.19% and the inflation rate is 8.37%. Solve for the real rate. Use the Fisher Effect formula.

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

QUESTION 16

What is the project's initial investment outlay based on the following information: The machinery could be purchased for $39,450. Shipping and installation costs would cost another $6,612. The project would require an initial investment in net working capital of $4,247. The company's tax rate is 30%.

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 17

One year ago, you puchased 175 shares of ABC stock for $43.77 per share. During the year, you receiveda dividend of $5.66 per share. Today, you sold all your shares for$54.34. What are the percentage return on your investment?

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter% in the answer box.For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

QUESTION 18

What is the Profitability Index (PI) of this project if the required rate is 6%?

Year CF 0 -$3,733 1 $1,153 2 $474 3 $2,192 4 $768 5 $853

Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 19

ABC Inc. is considering an investment of $1,171 million with after-tax cash inflows of $323 million per year for six years and an additional after-tax salvage value of 88 million in Year 6. The required rate of return is 5%. What is the investments Profitability Index (PI)?

Enter your answer rounded off to two decimal points.

1 points

QUESTION 20

ABC Company purchased a new machinery 4 years ago for $60,027. Today, it is selling this equipment for $13,345. What is the after-tax salvage value if the tax rate is 29 percent?

The MACRS allowance percentages are as follows, commencing with year one: 20.00, 32.00, 19.20, 11.52, 11.52, and 5.76 percent.

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 21

What is the NPV of this project if the required rate is 22%?

Year CF 0 -$1,707 1 $976 2 $504 3 $1,485

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 22

A 12-year project is expected to generate annual sales of $204,090, variable costs of $48,352, and fixed costs of $36,067. The annual depreciation is $28,204 and the tax rate is 37 percent. What is the annual operating cash flow?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 23

Based on the following information, what is the portfolio beta?

Stock Value Beta

A $22,665 3.46

B $23,061 1.92

C $11,694 0.12

D $20,988 2.74

Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 24

The risk-free rate is 5.7%, the market risk premium is 11.6%, and the stocks beta is 0.9. What is the required rate of return on the stock, E(Ri)?

Use the CAPM equation.

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box.For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

QUESTION 25

You have invested $51,193 portfolio in three securities. The three securities comprise of the risk-free asset, Stock A, and Stock B. The beta of stock A is 2.3 while the beta of stock B is 0.7. 25% of the portfolio is invested in the risk-free security. What is the dollar amount invested in stock B if the beta of the portfolio is 1.2?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 26

A 7.2% bond has a maturity of 15 years. The par value of the bond is $1,000. If the yield to maturity is 5.3% and the interest payments are made semi-annually, then what is the current price of the bond?

Enter your answer rounded off to two decimal points.

1 points

QUESTION 27

ABC has issued a $1000 par bond with 15 years to maturity.The bond is currently quoted at 107.8% of par value. The bond pays a semi-annual coupon of $63, and a maturity of five years. What is the current yield?

Enter your answer as a percentage rounded off to TWO decimal points.