QUESTION 1 How much did you borrow for your house if your monthly mortgage payment for a 30 year mortgage at 6 65 APR is $1,300 a $202,503 b $186,926 c $218,080 d $249,235 e $233,658 f $264,812 5 points QUESTION 2 Your required rate of return is 12 What is the net present value of a project with the following cash flows Year 0 1 2 3 4 5 Cash Flow 750 450 350 150 125 100 a 72 15 b 26 33 c 37 37 d 48 68 e 15 56 f 60 27 5 points QUESTION 3 You purchased a stock for $28 per share The most recent dividend was $2 50 and dividends are expected to grow at a rate of 8 indefinitely What is your required rate of return on the stock a 20 27 b 18 38 c 19 25 d 17 64 e 21 50 f 17 00 5 points QUESTION 4 You require a risk premium of 3 5 percent on an investment in a company The pure rate of interest in the market is 3 0 percent and the inflation premium is 3 percent US Treasury bills are risk free What should be the yield of the US Treasury bills Use multiplicative form a 5 58 b 5 83 c 6 35 d 6 09 e 5 06 f 5 32 5 points QUESTION 5 The dividend yield of a stock is 6 percent If the market price of the stock is $18 per share and its dividends have been growing at a constant rate of 6 , what was the most recent dividend paid by the company a $1 02 b $0 85 c $1 36 d $1 53 e $1 70 f $1 19 5 points QUESTION 6 Shady Rack Inc has a bond outstanding with 9 25 percent coupon, paid semiannually, and 21 years to maturity The market price of the bond is $1,047 68 Calculate the bonds yield to maturity (YTM) Now, if due to changes in market conditions, the market required YTM suddenly increases by 2 from your calculated YTM, what will be thepercent changein the market price of the bond a 17 76 b 16 39 c 17 09 d 14 87 e 14 01 f 15 66 5 points QUESTION 7 Bonds X and Y are identical, including the risk class The only difference between A and B is in the coupon payment as shown below Bond X Bond Y Face value $1,000 $1,000 Annual Coupon Payment $120 $130 Payment Frequency Semiannual Annual Years to maturity 15 15 Price $890 04 What is the price of bond Y a $989 75 b $973 44 c $940 92 d $925 88 e $956 95 f $1,007 15 5 points QUESTION 8 Bonds of Riverhawk Sport Authority (RSA) are selling in the market for $896 33 These bonds carry a 9 25 percent coupon paid semiannually, and have 20 years remaining to maturity What is the bonds capital gains yield assuming that the interest rates will remain constant over the year a 0 04 b 0 29 c 0 08 d 0 29 e 0 16 f 0 18 5 points QUESTION 9 A bond with a face value of $1,000 has annual coupon payments of $100 It was issued 10 years ago and has 7 years remaining to maturity The current market price for the bond is $1,000 Which of the following is true I Its YTM is 10 II Bonds coupon rate is 10 III The bonds current yield is 9 5 a I, II, and III b II, III Only c I, II Only d I Only e I, III Only f III Only 5 points QUESTION 10 Apple Sink Inc (ASI) just paid a dividend of $2 50 per share Its dividends are expected to grow at 30 a year for the next two years, 26 a year for the years 3 and 4, 16 for year 5, and at a constant rate of 6 per year thereafter What is the current market value of the ASIs stock if companies in this risk class have a 16 required rate of return a $54 27 b $51 29 c $42 87 d $48 35 e $45 54 f $56 03 5 points QUESTION 11 Last year, Jen and Berry Inc had sales of $55,000, cost of goods sold (COGS) of 12,000, depreciation charge of $3,000 and selling, general and administrative (SG A) cost of $10,000 The interest costs were $2,500 Thirty percent of SG A costs are fixed costs If its sales are expected to be $60,000 this year, what will be the estimated SG A costs this year a $14,250 b $13,250 c $10,636 d $12,667 e $12,000 f $11,500 5 points QUESTION 12 The Retarded Companys dividends are declining at an annual rate of 2 percent The company just paid a dividend of $4 per share You require a 16 percent rate of return How much will you pay for this stock a $13 85 b $12 57 c $19 20 d $21 78 e $15 33 f $17 09 5 points QUESTION 13 Sales and profits of Growth Inc are expected to grow at a rate of 25 per year for the next six years but the company will pay no dividends and reinvest all earnings After that, the dividends will grow at a constant annual rate of 7 At the end of year 7, the company plans to pay its first dividend of $5 00 per share If the required return is 16 , how much is the stock worth today a $22 80 b $18 24 c $13 68 d $25 08 e $20 52 f $15 96 5 points QUESTION 14 BB Lean has identified two mutually exclusive projects with the following cash flows Year 0 1 2 3 4 5 Cash Flow Project A 52,000 00 20,000 00 17,000 00 14,000 00 12,000 00 7,000 00 Cash Flow Project B 52,000 00 6,000 00 17,000 00 16,000 00 17,000 00 22,000 00 The company requires a 12 rate of return from projects of this risk What is the IRR of project B a 20 80 b 13 90 c 12 06 d 14 68 e 13 05 f 12 94 5 points QUESTION 15 Sanaponic, Inc will pay a dividend of $6 for each of the next 3 years, $8 for each of the years 4 7, and $10 for the years 8 10 Thereafter, starting in year 11, the company will pay a constant dividend of $9 year forever If you require 20 percent rate of return on investments in this risk class, how much is this stock worth to you a $41 46 b $45 68 c $50 50 d $34 54 e $55 99 f $37 77 5 points QUESTION 16 Riverhawk Corporation has a bond outstanding with a market price of $1,150 00 The bond has 10 years to maturity, pays interest semiannually, and has a yield to maturity of 9 What is the bonds coupon rate a 10 54 b 11 31 c 13 61 d 12 08 e 9 77 f 12 84 5 points QUESTION 17 FED Lean has identified two mutually exclusive projects with the following cash flows Year 0 1 2 3 4 5 Cash Flow Project A 52,000 00 19,000 00 16,000 00 14,000 00 12,000 00 9,000 00 Cash Flow Project B 52,000 00 8,000 00 12,000 00 16,000 00 22,000 00 20,000 00 The company requires a 12 rate of return from projects of this risk At what discount rate would you be indifferent between these two projects a 26 0812 b 3 1177 c 14 7386 d 15 8950 e 34 1306 f 13 5250 5 points QUESTION 18 The last dividend on Riverhawk Corporation's common stock was $4 00, and the expected constant growth rate is 10 percent If you require a rate of return of 20 percent, what is the highest price you should be willing to pay for this stock a $ 33 00 b $ 60 50 c $ 49 50 d $ 38 50 e $ 55 00 f $ 44 00 5 points QUESTION 19 BD Lean has identified two mutually exclusive projects with the following cash flows Year 0 1 2 3 4 5 Cash Flow Project A 52,000 00 18,000 00 17,000 00 15,000 00 12,000 00 9,000 00 Cash Flow Project B 52,000 00 17,800 00 10,000 00 12,000 00 17,000 00 22,000 00 The company requires an 11 5 rate of return from projects of this risk What is the NPV of project A a 5,180 35 b 1,395 64 c 972 57 d 417 37 e 5,972 87 f 1,624 90 5 points QUESTION 20 Riverhawk Sport Authority (RSA) will pay a dividend of $7 for each of the next 3 years, $8 for each of the years 4 6, $9 for each of the years 7 9, and a dividend of $10 for year 10 Thereafter, the company will pay no dividends If you require 12 percent rate of return on investments in this risk class, how much is this stock worth to you a $42 77 b $37 80 c $44 66 d $39 35 e $41 00 f $46 68 5 points QUESTION 21 Bonds of Riverhawk Sport Authority (RSA) are selling in the market for $1,166 93 These bonds carry a 10 25 percent coupon paid semiannually, and have 20 years remaining to maturity What is the bonds yield to maturity a 11 00 b 8 50 c 9 00 d 10 00 e 9 50 f 10 50

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QUESTION 1 How much did you borrow for your house if your monthly mortgage payment for a 30 year mortgage at 6.65% APR is $1,300?

QUESTION 1

How much did you borrow for your house if your monthly mortgage payment for a 30 year mortgage at 6.65% APR is $1,300?

a.
$202,503

b.
$186,926

c.
$218,080

d.
$249,235

e.
$233,658

f.
$264,812

5 points

QUESTION 2

Your required rate of return is 12%. What is the net present value of a project with the following cash flows?

Year 0 1 2 3 4 5

Cash Flow -750 450 350 150 125 -100

a.
72.15

b.
26.33

c.
37.37

d.
48.68

e.
15.56

f.
60.27

5 points

QUESTION 3

You purchased a stock for $28 per share. The most recent dividend was $2.50 and dividends are expected to grow at a rate of 8% indefinitely. What is your required rate of return on the stock?

a.
20.27%

b.
18.38%

c.
19.25%

d.
17.64%

e.
21.50%

f.
17.00%

5 points

QUESTION 4

You require a risk premium of 3.5 percent on an investment in a company. The pure rate of interest in the market is 3.0 percent and the inflation premium is 3 percent. US Treasury bills are risk free. What should be the yield of the US Treasury bills? Use multiplicative form.

a.
5.58%

b.
5.83%

c.
6.35%

d.
6.09%

e.
5.06%

f.
5.32%

5 points

QUESTION 5

The dividend yield of a stock is 6 percent. If the market price of the stock is $18 per share and its dividends have been growing at a constant rate of 6%, what was the most recent dividend paid by the company?

a.
$1.02

b.
$0.85

c.
$1.36

d.
$1.53

e.
$1.70

f.
$1.19

5 points

QUESTION 6

Shady Rack Inc. has a bond outstanding with 9.25 percent coupon, paid semiannually, and 21 years to maturity. The market price of the bond is $1,047.68. Calculate the bonds yield to maturity (YTM). Now, if due to changes in market conditions, the market required YTM suddenly increases by 2% from your calculated YTM, what will be thepercent changein the market price of the bond?

a.
-17.76%

b.
-16.39%

c.
-17.09%

d.
-14.87%

e.
-14.01%

f.
-15.66%

5 points

QUESTION 7

Bonds X and Y are identical, including the risk class. The only difference between A and B is in the coupon payment as shown below.

Bond X Bond Y

Face value $1,000 $1,000

Annual Coupon Payment $120 $130

Payment Frequency Semiannual Annual

Years to maturity 15 15

Price $890.04 ?

What is the price of bond Y?

a.
$989.75

b.
$973.44

c.
$940.92

d.
$925.88

e.
$956.95

f.
$1,007.15

5 points

QUESTION 8

Bonds of Riverhawk Sport Authority (RSA) are selling in the market for $896.33. These bonds carry a 9.25 percent coupon paid semiannually, and have 20 years remaining to maturity. What is the bonds capital gains yield assuming that the interest rates will remain constant over the year?

a.
-0.04%

b.
-0.29%

c.
0.08%

d.
0.29%

e.
-0.16%

f.
0.18%

5 points

QUESTION 9

A bond with a face value of $1,000 has annual coupon payments of $100. It was issued 10 years ago and has 7 years remaining to maturity. The current market price for the bond is $1,000. Which of the following is true: I. Its YTM is 10%. II. Bonds coupon rate is 10%. III. The bonds current yield is 9.5%.

a.
I, II, and III

b.
II, III Only

c.
I, II Only

d.
I Only

e.
I, III Only

f.
III Only

5 points

QUESTION 10

Apple Sink Inc. (ASI) just paid a dividend of $2.50 per share. Its dividends are expected to grow at 30% a year for the next two years, 26% a year for the years 3 and 4, 16% for year 5, and at a constant rate of 6% per year thereafter. What is the current market value of the ASIs stock if companies in this risk class have a 16% required rate of return?

a.
$54.27

b.
$51.29

c.
$42.87

d.
$48.35

e.
$45.54

f.
$56.03

5 points

QUESTION 11

Last year, Jen and Berry Inc. had sales of $55,000, cost of goods sold (COGS) of 12,000, depreciation charge of $3,000 and selling, general and administrative (SG&A) cost of $10,000. The interest costs were $2,500. Thirty percent of SG&A costs are fixed costs. If its sales are expected to be $60,000 this year, what will be the estimated SG&A costs this year?

a.
$14,250

b.
$13,250

c.
$10,636

d.
$12,667

e.
$12,000

f.
$11,500

5 points

QUESTION 12

The Retarded Companys dividends are declining at an annual rate of 2 percent. The company just paid a dividend of $4 per share. You require a 16 percent rate of return. How much will you pay for this stock?

a.
$13.85

b.
$12.57

c.
$19.20

d.
$21.78

e.
$15.33

f.
$17.09

5 points

QUESTION 13

Sales and profits of Growth Inc. are expected to grow at a rate of 25% per year for the next six years but the company will pay no dividends and reinvest all earnings. After that, the dividends will grow at a constant annual rate of 7%. At the end of year 7, the company plans to pay its first dividend of $5.00 per share. If the required return is 16%, how much is the stock worth today?

a.
$22.80

b.
$18.24

c.
$13.68

d.
$25.08

e.
$20.52

f.
$15.96

5 points

QUESTION 14

BB Lean has identified two mutually exclusive projects with the following cash flows.

Year 0 1 2 3 4 5

Cash Flow Project A -52,000.00 20,000.00 17,000.00 14,000.00 12,000.00 7,000.00

Cash Flow Project B -52,000.00 6,000.00 17,000.00 16,000.00 17,000.00 22,000.00

The company requires a 12% rate of return from projects of this risk. What is the IRR of project B?

a.
20.80%

b.
13.90%

c.
12.06%

d.
14.68%

e.
13.05%

f.
12.94%

5 points

QUESTION 15

Sanaponic, Inc. will pay a dividend of $6 for each of the next 3 years, $8 for each of the years 4-7, and $10 for the years 8-10. Thereafter, starting in year 11, the company will pay a constant dividend of $9/year forever. If you require 20 percent rate of return on investments in this risk class, how much is this stock worth to you?

a.
$41.46

b.
$45.68

c.
$50.50

d.
$34.54

e.
$55.99

f.
$37.77

5 points

QUESTION 16

Riverhawk Corporation has a bond outstanding with a market price of $1,150.00. The bond has 10 years to maturity, pays interest semiannually, and has a yield to maturity of 9%. What is the bonds coupon rate?

a.
10.54%

b.
11.31%

c.
13.61%

d.
12.08%

e.
9.77%

f.
12.84%

5 points

QUESTION 17

FED Lean has identified two mutually exclusive projects with the following cash flows.

Year 0 1 2 3 4 5

Cash Flow Project A -52,000.00 19,000.00 16,000.00 14,000.00 12,000.00 9,000.00

Cash Flow Project B -52,000.00 8,000.00 12,000.00 16,000.00 22,000.00 20,000.00

The company requires a 12% rate of return from projects of this risk. At what discount rate would you be indifferent between these two projects?

a.
26.0812%

b.
3.1177%

c.
14.7386%

d.
15.8950%

e.
34.1306%

f.
13.5250%

5 points

QUESTION 18

The last dividend on Riverhawk Corporation's common stock was $4.00, and the expected constant growth rate is 10 percent. If you require a rate of return of 20 percent, what is the highest price you should be willing to pay for this stock?

a.
$ 33.00

b.
$ 60.50

c.
$ 49.50

d.
$ 38.50

e.
$ 55.00

f.
$ 44.00

5 points

QUESTION 19

BD Lean has identified two mutually exclusive projects with the following cash flows.

Year 0 1 2 3 4 5

Cash Flow Project A -52,000.00 18,000.00 17,000.00 15,000.00 12,000.00 9,000.00

Cash Flow Project B -52,000.00 17,800.00 10,000.00 12,000.00 17,000.00 22,000.00

The company requires an 11.5% rate of return from projects of this risk. What is the NPV of project A?

a.
5,180.35

b.
1,395.64

c.
972.57

d.
417.37

e.
5,972.87

f.
1,624.90

5 points

QUESTION 20

Riverhawk Sport Authority (RSA) will pay a dividend of $7 for each of the next 3 years, $8 for each of the years 4-6, $9 for each of the years 7-9, and a dividend of $10 for year 10. Thereafter, the company will pay no dividends. If you require 12 percent rate of return on investments in this risk class, how much is this stock worth to you?

a.
$42.77

b.
$37.80

c.
$44.66

d.
$39.35

e.
$41.00

f.
$46.68

5 points

QUESTION 21

Bonds of Riverhawk Sport Authority (RSA) are selling in the market for $1,166.93. These bonds carry a 10.25 percent coupon paid semiannually, and have 20 years remaining to maturity. What is the bonds yield to maturity?

a.
11.00%

b.
8.50%

c.
9.00%

d.
10.00%

e.
9.50%

f.
10.50%

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Previous Question Next Question

a.	$202,503
b.	$186,926
c.	$218,080
d.	$249,235
e.	$233,658
f.	$264,812

	Bond X	Bond Y
Face value	$1,000	$1,000
Annual Coupon Payment	$120	$130
Payment Frequency	Semiannual	Annual
Years to maturity	15	15
Price	$890.04	?

a.	I, II, and III
b.	II, III Only
c.	I, II Only
d.	I Only
e.	I, III Only
f.	III Only

Year	0	1	2	3	4	5
Cash Flow Project A	-52,000.00	20,000.00	17,000.00	14,000.00	12,000.00	7,000.00
Cash Flow Project B	-52,000.00	6,000.00	17,000.00	16,000.00	17,000.00	22,000.00

a.	72.15
b.	26.33
c.	37.37
d.	48.68
e.	15.56
f.	60.27

a.	20.27%
b.	18.38%
c.	19.25%
d.	17.64%
e.	21.50%
f.	17.00%

a.	5.58%
b.	5.83%
c.	6.35%
d.	6.09%
e.	5.06%
f.	5.32%

a.	$1.02
b.	$0.85
c.	$1.36
d.	$1.53
e.	$1.70
f.	$1.19