Lester's Diner just paid an annual dividend of $.24 a share and plans on increasing this amount by 2 percent annually. What is the expected dividend for Year 6 ? A. $.30 B. $.33 C. $.24 D. $.27 E. $.35 17. Wilton's Market just announced its next annual dividend will be $1.50 a share with future dividends increasing by 1.8 percent annually. How much will one share of this stock be worth five years from now if the required return is 15.5 percent? A. $11.76 B. $11.97 C. $14.14 D. $12.19 E. $13.79 18. Mario's is going to pay $1,$2.50, and $5 a share over the next three years, respectively. After that, the company plans to pay annual dividends of $1.25 per share indefinitely. If your required return is 13 percent, how much are you willing to pay for one share today? A. $9.62 B. $10.87 C. $11.67 D. $12.97 E. $13.67 19. The standard deviation for a set of stock returns can be calculated as the: A. variance squared. B. positive square root of the variance. C. positive square root of the average return. D. average return divided by N minus one, where N is the number of returns. E. average squared difference between the actual return and the average return. 20. One year ago, Stacey purchased 300 shares of IXC Tek stock at a price of $11.23 per share. The stock pays an annual dividend of $.23 per share. Today, Stacey sold all of her shares for $16.20 per share. What is her total dollar return on this investment? A. $1,703 B. $1,560 C. $1,422 D. $1,389 E. $1,491 8. Theo just won a prize that will pay him $12,000 a year for 12 years, starting at the end of Year 12. What is the current value of this prize if the discount rate is 9 percent, compounded annually? A. $34,282.98 B. $30,550.64 C. $33,300.20 D. $86,191.91 E. $85,928.70 9. You have $100,000 saved today and plan to withdraw $8,000 a year. How long can you make these withdrawals if you earn an annul percentage rate of 3.5 percent? A. 14.96 years B. 15.48 years C. 16.73 years D. 18.08 years E. 19.00 years 10. Interest rates or rates of return on investments that have been adjusted for the effects of inflation are called rates. A. real B. nominal C. effective D. stripped E. coupon 11. Which formula computes the actual real rate of return on an investment? A. C/FV B. C/PV C. r=(1+R)(1+h)1 D. r=(1+R)/(1+h)1 E. R=(1+r)(1+h)1 12. The Rose Shoppe offers 10 -year, 8 percent coupon bonds with semiannual payments and a yield to maturity of 8.24 percent. What is the market price of a $1,000 face value bond? A. $990.32 B. $983.86 C. $1,108.16 D. $1,521.75 E. $591.04 13. A is a form of equity security that are likely to receive a constant dividend A. debenture B. bond C. common stock D. preferred stock E. proxy 14. The market in which new securities are originally sold to investors is called the market. A. dealer B. auction C. over-the-counter D. secondary E. primary 15. The ELL common stock pays an annual dividend of $1.90 a share and is committed to maintaining a constant dividend. How much are you willing to pay for one share of this stock if your required return is 11 percent? A. $15.56 B. $16.67 C. $17.27 D. $18.88 E. $20.00 Multiple choices ( 5 points) 1. A current asset is best defined as: A. the market value of all assets currently owned by the firm. B. an asset the firm expects to purchase within the next year. C. the amount of cash on hand the firm currently shows on its balance sheet. D. cash and other assets owned by the firm that will convert to cash within the next year. E. the value of fixed assets the firm expects to sell within the next year. 2. Which one of the following accounts is generally the most liquid? A. Patent B. Building C. Accounts receivable D. Equipment E. Inventory 3. A firm has beginning retained earnings of $4,200 and ending retained earnings of $4,650. What is the Amount of dividends paid if the firm earned a net income of $1,950 ? A. $450 B. $1,950 C. $2,400 D. $1,500 E. $900 4. Art's Boutique has sales of $640,000 and costs of $480,000. Interest expense is $40,000 and depreciation is $60,000. The tax rate is 34 percent. What is the net income? A. $20,400 B. $39,600 C. $50,400 D. $79,200 E. $99,600 5. Which ratio computes the amount of net income generated per each $1 of sales? A. EV multiple B. Gross margin C. Return on equity D. Profit margin E. PE ratio 6. Les' Motors has sales of $482,800, cost of goods sold of $297,400, inventory of $169,600, and account receivable of $52,900. How many days, on average, does it take the firm to sell its inventory? A. 65.27 days B. 85.20 days C. 208.15 days D. 128.22 days E. 284.67 days 7. An annuity stream where the payments occur forever is called a(n): A. annuity due. B. indemnity. C. perpetuity. D. amortized cash flow stream. E. ordinary annuity