QUESTION 1

If a credit card company offered you a line of credit with a 3% APR (annual percentage rate), compounded daily, which of the following would be the effective annual rate? Use 365 days per year in the calculation.

Answer in the decimal format (e.g. 10.52% is 0.1052) with 4 decimals.

QUESTION 2

If someone is guaranteed to receive $6,000 in 29 years and their discount rate is 1%, what should they be willing to accept now in exchange? That is, what should someone at least pay now for the guaranteed future cash receipt?

Answer in the following form: $#.## (with 2 decimals). DO NOT use a comma in your answer.

QUESTION 3

Imagine you invest $1,000 right now in a stock that will pay 1% in dividends annually. Assuming you reinvest dividends and the price of the stock does not change, how much will your stock position be worth in 25 years from now? Answer in the following form: $#.## (with 2 decimals). DO NOT use a comma in your answer.

1 points

QUESTION 4

Suppose someone offers you an investment that pays $400 at the end of each year for 6 years. If the expected rate of return is 3% compounded annually, what is the most you should be willing to pay today for that investment?

Answer in the following form: $#.## (with 2 decimals). DO NOT use a comma in your answer.

1 points

QUESTION 5

Suppose you invest $600 at the beginning of the each year, starting now and continuing for 12 years. If your rate of return is 8% compounded annually, what will the total value be 12 years from today?

Answer in the following form: $#.## (with 2 decimals). DO NOT use a comma in your answer.

1 points

QUESTION 6

Suppose you own a preferred share of a company that will pay $21 each year forever. What should that share be worth today given a 11% required rate of return?

Answer in the following form: $#.## (with 2 decimals). DO NOT use a comma in your answer.

1 points

QUESTION 7

Given the following information, what should the current price of this bond be? Use the bond valuation model.

Face value: $1,000

Coupon rate: 7%

Yield to maturity: 8%

Years to maturity: 8

Assume interest is paid once per year and the next payment is a year from now.

Answer in the following form: $#.## (with 2 decimals). DO NOT use a comma in your answer.

1 points

QUESTION 8

Your accountants and financial analysts have gathered the following data. Determine the hurdle rate for use in the capital budgeting process. The current corporate income tax rate is 42%.

Answer in the decimal format (e.g. 10.52% is 0.1052) with 4 decimals. Do NOT use commas in your answer.

Capital Structure

Debt = 27%

Preferred Stock = 4%

Common Stock = 48%

New Common Stock = remainder

Before-tax Cost

Debt = 3%

Preferred Stock = 6%

Common Stock = 10%

New Common Stock = 13%

1 points

QUESTION 9

What is the net present value of the below project? The relevant cash flows are listed by period. The periodic discount rate is 13%.

Answer in the conventional $X.XX format and express negative numbers with a "-" after the units (e.g. $-21). Do NOT use any commas for large numbers.

Period	Cash Flow
0	-408
1	130
2	434
3	172

1 points

QUESTION 10

What is the modified internal rate of return (MIRR) of the below project?

Answer in the decimal format (e.g. 10.52% is 0.1052) with 4 decimals. If the answer is negative, place a leading hyphen "-" to indicate so. Do NOT use commas in your answer.

The relevant cash flows are listed by period. The WACC is 8%. The assumed reinvestment rate is 6%.

Period	Cash Flow
0	-234
1	358
2	-252
3	742

1 points

QUESTION 11

What is the net present value of the below project? The relevant cash flows are listed by period. The periodic discount rate is 17%.

Answer in the conventional $X.XX format and express negative numbers with a "-" after the units (e.g. $-21). Do NOT use any commas for large numbers.

Period	Cash Flow
0	-491
1	-195
2	249
3	181

1 points

QUESTION 12

As the CFO, you have final say on major capital budget decisions. You want to fund a major new project but want more information first. You have your team prepare and present the following information:

The periodic discount rate is 13%.

Best Case

NPV = $1293

Probability = 16%

Base Case

NPV = $562

Probability = remainder

Worst Case

NPV = $-3406

Probability = 18%

Giving the likelihood of each case, what is the correct risk-adjusted NPV to compare against other investments?

Answer in the conventional $X.XX format and express negative numbers with a "-" after the units (e.g. $-21). Do NOT use any commas for large numbers.

1 points

QUESTION 13

As the current CFO, you are responsible for presenting the dividend policy decisions to the Board of Directors at fiscal year end. You are preparing to present to the Board tomorrow at the annual meeting. You are considering increasing the historically stable dividend, knowing that will decrease future growth potential.

Assuming the following information, use the dividend discount model to predict the share price under the new proposal. The required rate of return (RRoR) for investors is assumed to be unchanged by the proposal. The rates given are annual and the dividends are paid once per year, just before the annual meeting.

Current Dividend = $8

Current RRoR = 17%

Current Growth = 6%

Proposal

Dividend increase = $6

Growth decrease = 3.2% (absolute value)

What is the dollar change in share price? Answer in the conventional $X.XX format and express negative numbers with a "-" after the units (e.g. $-21). Do NOT use commas in your answer.

1 points

QUESTION 14

If a barrel of oil is 144.35 USD, how much is a barrel of oil in euros given the below exchange rate information?

Do not enter any units, just the number to 2 decimal places (e.g. 88.11).

EURUSD: 1.6314 USD per euro

1 points

QUESTION 15

Given the below exchange rate information, find the missing cross rate.

Do not enter any units, just the number to 2 decimal places (e.g. 88.11).

GBPUSD: 1.4584 United States Dollars per 1 Great British Pound

USDJPY: 192.94 Japanese Yen per 1 USD

GBPJPY: _____ JPY per 1 GBP

How many yen does it take to buy 1 pound?

1 points

QUESTION 16

An investor from the United States bought a security listed on a Brazilian exchange. At the time of purchase, she paid 25063 Reals or the equivalent of $9859 in US dollars (USD).

After exactly 1 year, she sold the security for 79% more Reals than the purchase price. But, the Real depreciated against the USD by 17% during that same period.

After converting the reals from the sale back to USD, what is the investor's rate of return?

Answer in the decimal format (e.g. 10.52% is 0.1052) with 4 decimals. If the answer is negative, place a leading hyphen "-" to indicate so. Do NOT use commas in your answer.