Q1. Noora Industries stock has a beta of 1.8, the risk-free rate is 5.00%, and the market risk premium (MRP) is 7.00%. What is Nooras required rate of return (RRR)? (Hint: use CAPM model)

a. 13.70%

b. 14.65%

c. 17.60%

d. 17.90%

e. none of the above, the answer is ________%.

Q2. Manama Industries issued 20-year, 12% coupon bonds 5 years ago, at par. Three years ago, you purchased one of their bonds when it was yielding 6%. Today the yield-to-maturity (YTM) on these bonds is 13%. What is your Capital gains (losses) yield if you sell your bond today?

1. 12.00%
2. 24.00%
3. -36.98%
4. -44.50%
5. None of the above, the answer is ______________%.

Q3. The TDD Corporation is considering a $77 million investment in a new project. The project is expected to generate net cashflows of $20 million per year for 5 years. The ratio of debt to equity is 2 to 1. The cost of equity is 15%, the cost of debt is 9%, and the tax rate is 40%. What is the NPV of the project?

A) $1,574,187

B) $1,607,174

C) -$1,392,826

D) -$1,519,923

E) none of the above, the answer is $____________.