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is called: A) free interest B) dual interest C) simple interest. D) interest on interest. E) compound interest. 15. Southern Bakeries just paid its annual
is called: A) free interest B) dual interest C) simple interest. D) interest on interest. E) compound interest. 15. Southern Bakeries just paid its annual dividend of $.48 a share. The stock has a market price of $17.23 and a beta of 93. The return on the U.S. Treasury bill is 3.1 percent and the market risk premium is 7.6 percent. What is the cost of equity? A) 9.98 percent B) 10.04 percent C) 10.17 percent D) 10.30 percent E) 10.45 percent 16. Which one of the following statements correctly defines a time value of money relationship? A) Time and future values are inversely related, all else held constant. B) Interest rates and time are positively related, all else held constant. S An increase in a positive discount rate increases the present value. D) An increase in time increases the future value given a zero rate of interest. E) Time and present value are inversely related, all else held constant. 17. Project A has cash flows of $4,000, $3,000, SO, and $3,000 for Years 1 to 4, respectively. Project B has cash flows of $2,000, $3,000, $2,000, and $3,000 for Years 1 to 4, respectively. Which one of the following statements is correct assuming the discount rate is positive? (No calculations needed) A) The cash flows for Project B are an annuity, but those of Project A are not. B) Both sets of cash flows have equal present values as of Time 0. D) The present value at Time 0 of the final cash flow for Project A will be discounted using an xponent of three. Both projects have equal values at any point in time since they both pay the same total mount. Project B is worth less today than Project A
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