Q2)

Determine the present value of an 8 year annuity that pays $11,000 at the end of each year discounted at a rate of 6%.

Select one:

A. $69,015

B. $66,000

C. $88,000

D. $68,308

Q3)

George forecasts a $1.00 dividend for 2017, $1.10 dividend for 2018 and a $1.20 dividend for 2019 for Mikayla Corporation. For all years after 2019, George forecasts that Mikayla Corporation will pay a $1.30 dividend. Using the dividend discount valuation model, determine the intrinsic value of Mikayla Corporation, assuming the companys cost of equity capital is 8%.

Select one:

A. $18.33

B. $15.72

C. $16.25

D. $14.57

Q4)

The following data pertains to Radek Corp., a manufacturer of office supplies. Dollar amounts in thousands.

Total assets	$8,731
Interest-bearing debt	$4,239
Average borrowing rate for debt	10.0%
Common equity:
Book value	$3,130
Market value	$16,284
Marginal income tax rate	35%
Market equity beta	1.33

Assuming that the risk-free rate is 5.3% and the market risk premium is 7.3%, calculate Radek's cost of equity capital, using the capital asset pricing model.

Select one:

A. 14.35%

B. 15.01%

C. 9.71%

D. 7.05%

Q5)

The following data pertains to Radek Corp., a manufacturer of office supplies. Dollar amounts in thousands.

Total assets	$8,731
Interest-bearing debt	$4,239
Average borrowing rate for debt	10.0%
Common equity:
Book value	$3,130
Market value	$16,284
Marginal income tax rate	35%
Market equity beta	1.33

Calculate Radek's cost of debt capital.

Select one:

A. 10.00%

B. 6.50%

C. 3.50%

D. 13.30%