Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I have 1hr and 20 minutes. need a finance expert. just right option. but make sure right. will tip 70$ ONLY EXPERT WITH 5 stars...

image text in transcribed

I have 1hr and 20 minutes. need a finance expert. just right option. but make sure right.

will tip 70$

ONLY EXPERT WITH 5 stars... please evry imp

image text in transcribed Solving for Rates What annual rate of return is earned on a $3,600 investment when it grows to $7,700 in twenty years? 1.14% 3.87% 2.14% 3.69% Present Value of a Perpetuity A perpetuity pays $250 per year and interest rates are 6.5 percent. How much would its value change if interest rates increased to 9.0 percent? $1,068.37 decrease $625.00 increase $1,068.37 increase $625.00 decrease Zero Coupon Bond Price Calculate the price of a zero coupon bond that matures in 10 years if the market interest rate is 6 percent. (Round your answer to 2 decimal places.) $940.00 $558.39 $1,000.00 $553.68 Internal Growth Rate Last year Umbrellas Unlimited Corporation had an ROA of 9.7% and a dividend payout ratio of 50.3%. What is the internal growth rate? 94.09% 1% 2.16% 5.07% P/E Ratio and Stock Price International Business Machines (IBM) has earnings per share of $6.90 and a P/E ratio of 15.20. What is the stock price? $44.20 $104.88 $.45 $2.20 Income Statement Bullseye, Inc.'s 2008 income statement lists the following income and expenses: EBIT = $907,500, Interest expense = $84,000, and Net income = $580,500. What is the 2008 Taxes reported on the income statement? $327,000 $243,000 $823,500 There is not enough information to calculate 2008 Taxes. Interest-on-Interest Consider a $1,400 deposit earning 11 percent interest per year for 8 years. How much total interest is earned on interest (excluding interest earned on the original deposit)? $1,826.35 $1,232.00 $594.35 $123.20 Present Value of an Annuity What is the present value of a $1,400 annuity payment over 8 years if interest rates are 9 percent? $8,393.35 $702.61 $2,789.59 $7,748.75 Liquidity and Asset Management Ratios Oasis Products, Inc. has current liabilities = $9.9 million, current ratio = 1.90 times, inventory turnover ratio = 12.4 times, average collection period = 24 days, and sales = $110 million. What is the value of their cash and marketable securities? (Consider a 365 days a year.) $2,706,155 $8,870,968 $18,810,000 $16,064,813 Compounding with Different Interest Rates A deposit of $740 earns interest rates of 10.4 percent in the first year and 7.4 percent in the second year. What would be the second year future value? $871.72 $817.63 $877.42 $1,611.72 Taxable Equivalent Yield What's the taxable equivalent yield on a municipal bond with a yield to maturity of 5.2 percent for an investor in the 25 percent marginal tax bracket? (Round your answer to 2 decimal places.) 20.80% 6.93% 1.30% 5.20% Debt Management Ratios Trina's Trikes, Inc. reported a debt-to-equity ratio of 1.86 times at the end of 2008. If the firm's total debt at year-end was $9.50 million, how much equity does Trina's Trikes have? $9.50 million $5.11 million $17.67 million $1.86 million Future Value of an Annuity What is the future value of a $1,200 annuity payment over 10 years if the interest rates are 8 percent? $2,590.71 $17,383.87 $12,960.00 $13,723.07 Selling Stock with a Limit Order You would like to sell 100 shares of Pfizer, Inc.(PFE). The current bid and ask quotes are $27.27 and $27.30, respectively. You place a limit sell-order at $27.29. If the trade executes, how much money do you receive from the buyer? $2,727 $5,457 $2,729 $2,730 Future Value of an Annuity Due If the future value of an ordinary, 5-year annuity is $7,600 and interest rates are 8 percent, what's the future value of the same annuity due? $8,208.01 $7,037.04 $7,980 $7,600 Determinants of Interest Rate for Individual Securities The Wall Street Journal reports that the rate on 3-year Treasury securities is 6.60 percent, and the 6-year Treasury rate is 6.85 percent. From discussions with your broker, you have determined that expected inflation premium is 2.10 percent next year, 2.35 percent in Year 2, and 2.55 percent in Year 3 and beyond. Further, you expect that real interest rates will be 3.30 percent annually for the foreseeable future. What is the maturity risk premium on the 6-year Treasury security? 1.20% .75% 1.45% 1.00% Value of a Preferred Stock If a preferred stock from Ecology and Environment, Inc. (EEI) pays $19.50 in annual dividends, and the required return on the preferred stock is 7.50 percent, what's the value of the stock? $2.60 $260.00 $146.25 $1.46 Free Cash Flow You are considering an investment in Crew Cut, Inc. and want to evaluate the firm's free cash flow. From the income statement, you see that Crew Cut earned an EBIT of $23.18 million, paid taxes of $3.82 million, and its depreciation expense was $7.82 million. Crew Cut's gross fixed assets increased by $10.18 million from 2007 to 2008. The firm's current assets increased by $6.18 million and spontaneous current liabilities increased by $3.82 million. What is Crew Cut's operating cash flow, investment in operating capital and free cash flow for 2008, respectively in millions? $23.18, $11.64, $11.54 $23.18, $10.18, $13.00 $27.18, $12.54, $14.64 $27.18, $10.18, $17.00 Time to Maturity A bond issued by a corporation on September 1, 1989 is scheduled to mature on September 1, 2046. If today is September 2, 2009, what is this bond's time to maturity? 37 years 20 years 46 years 57 years Determinants of Interest Rate for Individual Securities A particular security's default risk premium is 4.50 percent. For all securities, the inflation risk premium is 3.25 percent and the real interest rate is 3.50 percent. The security's liquidity risk premium is 1.20 percent and maturity risk premium is 1.75 percent. The security has no special covenants. What is the security's equilibrium rate of return? 2.84% 14.20% 13.00% 9.70% Solving for Rates What annual rate of return is earned on a $3,600 investment when it grows to $7,700 in twenty years? 1.14% 3.87% 2.14% 3.69% Present Value of a Perpetuity A perpetuity pays $250 per year and interest rates are 6.5 percent. How much would its value change if interest rates increased to 9.0 percent? $1,068.37 decrease $625.00 increase $1,068.37 increase $625.00 decrease Zero Coupon Bond Price Calculate the price of a zero coupon bond that matures in 10 years if the market interest rate is 6 percent. (Round your answer to 2 decimal places.) $940.00 $558.39 $1,000.00 $553.68 Internal Growth Rate Last year Umbrellas Unlimited Corporation had an ROA of 9.7% and a dividend payout ratio of 50.3%. What is the internal growth rate? 94.09% 1% 2.16% 5.07% P/E Ratio and Stock Price International Business Machines (IBM) has earnings per share of $6.90 and a P/E ratio of 15.20. What is the stock price? $44.20 $104.88 $.45 $2.20 Income Statement Bullseye, Inc.'s 2008 income statement lists the following income and expenses: EBIT = $907,500, Interest expense = $84,000, and Net income = $580,500. What is the 2008 Taxes reported on the income statement? $327,000 $243,000 $823,500 There is not enough information to calculate 2008 Taxes. Interest-on-Interest Consider a $1,400 deposit earning 11 percent interest per year for 8 years. How much total interest is earned on interest (excluding interest earned on the original deposit)? $1,826.35 $1,232.00 $594.35 $123.20 Present Value of an Annuity What is the present value of a $1,400 annuity payment over 8 years if interest rates are 9 percent? $8,393.35 $702.61 $2,789.59 $7,748.75 Liquidity and Asset Management Ratios Oasis Products, Inc. has current liabilities = $9.9 million, current ratio = 1.90 times, inventory turnover ratio = 12.4 times, average collection period = 24 days, and sales = $110 million. What is the value of their cash and marketable securities? (Consider a 365 days a year.) $2,706,155 $8,870,968 $18,810,000 $16,064,813 Compounding with Different Interest Rates A deposit of $740 earns interest rates of 10.4 percent in the first year and 7.4 percent in the second year. What would be the second year future value? $871.72 $817.63 $877.42 $1,611.72 Taxable Equivalent Yield What's the taxable equivalent yield on a municipal bond with a yield to maturity of 5.2 percent for an investor in the 25 percent marginal tax bracket? (Round your answer to 2 decimal places.) 20.80% 6.93% 1.30% 5.20% Debt Management Ratios Trina's Trikes, Inc. reported a debt-to-equity ratio of 1.86 times at the end of 2008. If the firm's total debt at year-end was $9.50 million, how much equity does Trina's Trikes have? $9.50 million $5.11 million $17.67 million $1.86 million Future Value of an Annuity What is the future value of a $1,200 annuity payment over 10 years if the interest rates are 8 percent? $2,590.71 $17,383.87 $12,960.00 $13,723.07 Selling Stock with a Limit Order You would like to sell 100 shares of Pfizer, Inc.(PFE). The current bid and ask quotes are $27.27 and $27.30, respectively. You place a limit sell-order at $27.29. If the trade executes, how much money do you receive from the buyer? $2,727 $5,457 $2,729 $2,730 Future Value of an Annuity Due If the future value of an ordinary, 5-year annuity is $7,600 and interest rates are 8 percent, what's the future value of the same annuity due? $8,208.01 $7,037.04 $7,980 $7,600 Determinants of Interest Rate for Individual Securities The Wall Street Journal reports that the rate on 3-year Treasury securities is 6.60 percent, and the 6-year Treasury rate is 6.85 percent. From discussions with your broker, you have determined that expected inflation premium is 2.10 percent next year, 2.35 percent in Year 2, and 2.55 percent in Year 3 and beyond. Further, you expect that real interest rates will be 3.30 percent annually for the foreseeable future. What is the maturity risk premium on the 6-year Treasury security? 1.20% .75% 1.45% 1.00% Value of a Preferred Stock If a preferred stock from Ecology and Environment, Inc. (EEI) pays $19.50 in annual dividends, and the required return on the preferred stock is 7.50 percent, what's the value of the stock? $2.60 $260.00 $146.25 $1.46 Free Cash Flow You are considering an investment in Crew Cut, Inc. and want to evaluate the firm's free cash flow. From the income statement, you see that Crew Cut earned an EBIT of $23.18 million, paid taxes of $3.82 million, and its depreciation expense was $7.82 million. Crew Cut's gross fixed assets increased by $10.18 million from 2007 to 2008. The firm's current assets increased by $6.18 million and spontaneous current liabilities increased by $3.82 million. What is Crew Cut's operating cash flow, investment in operating capital and free cash flow for 2008, respectively in millions? $23.18, $11.64, $11.54 $23.18, $10.18, $13.00 $27.18, $12.54, $14.64 $27.18, $10.18, $17.00 Time to Maturity A bond issued by a corporation on September 1, 1989 is scheduled to mature on September 1, 2046. If today is September 2, 2009, what is this bond's time to maturity? 37 years 20 years 46 years 57 years Determinants of Interest Rate for Individual Securities A particular security's default risk premium is 4.50 percent. For all securities, the inflation risk premium is 3.25 percent and the real interest rate is 3.50 percent. The security's liquidity risk premium is 1.20 percent and maturity risk premium is 1.75 percent. The security has no special covenants. What is the security's equilibrium rate of return? 2.84% 14.20% 13.00% 9.70%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

CFIN

Authors: Scott Besley, Eugene Brigham

5th edition

1305661656, 9781305888036 , 978-1305666870

More Books

Students also viewed these Finance questions