FINANCE

1.

An investment institution is selling long-term savings certificated that pays at a rate of 5.5%/annum compound continuously. What is the actual annual yield if

i=e^(r) -1

	a.	5.65%
	b.	6.56%
	c.	8.79%
	d.	7.79%
	e.	None of the above

2.

The following table shows data for 5 projects of your company

Calculate the weighted average production rate for these projects

Project	Crew hours/cubic meter	Cubic meter placed
1	0.375	1200
2	0.680	426
3	0.420	391
4	0.481	288
5	0.555	61

	a.	1076.28 crew hours/m3
	b.	0.531 crew hours/m3
	c.	0.565 crew hours/m3
	d.	0.455 crew hours/m3
	e.	0.0531 crew hours/m3

3.

Your company wants to expand their business to two new continents i.e. Europe and Asia. Assume 50/50 capital allocation to Europe/Asia. Total Capital amount of $10m is required. Debt/Equity Ratio =32%, WACE=20%, Corporate tax rate is 30%. European Financier prepared to finance only 25% of approved capital at 9%/yr Interest rate but is not prepared to finance projects in Asia. USA Financier prepared to finance 45% of capital at 21%/yr interest rate for Asia and 17%/yr for Europe. Asian Financier is prepared to finance 30% of capital for Asia only at 15%/yr interest rate.

Calculate Cost of Debt for Europe with a Debt/Equity ratio of 32%

	a.	14.1%
	b.	>14.1%
	c.	11.34%
	d.	10.8%
	e.	None of the above

4.

Calculate the weighted average cost of equity (WACE) when

Cost of Equity
Cost of Common Stock	24%
Cost of Preferred Stock	10%
Cost of Retained Earnings	20%

Approved Stock Split

Common Stock 50%

Preferred Stock 25%

Retained Earnings 25%

	a.	WACE<12%
	b.	WACE>20%
	c.	WACE=19.5%
	d.	WACE=15.9%
	e.	None of the above

PLEASE ANSWER TIMEOUSLY.