Question 1

What is the future value of $1,300 place in saving account for four years if the account pays 0.09 compound quarterly (Answer should be in two decimal places).

Question 2

Your brother who is six years old, just received a trust fund that will be worth $21,000 when he is 21 years old. If the fund earns 0.10 interest compound annually, what is the value of the funds today.

Question 3

If you were to borrow $9,900 over five years at 0.10 compounded monthly, what would be your monthly payment?

Question 4

Your uncle promise to give you $500 per quarter for the next five years. How much is his promise worth right now if the interest is 0.09 compounded quarterly.

Question 5

A stock has an expected return of 0.12 and a variance of 0.02. What is it coefficient of variation.

Question 6

Use the following information to calculate your company expected return

States Probability Return

Boom 20% 0.30

Normal 60% 0.12

Recession 20% -0.20

Question 7

You have invested in stock J and M. from the following information, determine the beta for your portfolio.

Expected Amount

Return Investment Beta

Stock J 0.11 $100,000 1.10

Stock M 0.08 $300,000 0.72

Question 8

Frazier manufacturing paid a dividend last year of $2, which is expected to grow at a constant rate of 5%. Frazier has a beta of 1.3. if the market is returning 11% and the risk free rate is 4%, calculate the value of Fraziers stock

A - $25.93

B - $31.33

C - $38.53

D - $41.63

Question 9

You have invested 30% of your portfolio in Jacob, INC. 40% IN Bella CO, and 30% in Edward Resources. What is the expected return of your portfolio if Jacob, Bella, and Edward have expected returns of 0.04, 0.10, and 0.13?

Question 10

The co-variance of the return between Willow stock and Sky Diamond stock is 0.0920. The variance of Willow is 0.1000, and the variance of Sky Diamond is 0.1180. What is the correlation between the returns of the two stocks?

Question 11

A project has the following cash flows

0 1 2 3

($500) ($1,200) ($200) ($290.00)

What is the projects NPV if the interest rate is $6%?

Question 12

Assume the following factors about a firms financing in the year. Calculate the weighted cost of the capital of this project.

Proportion of capital projected fund by debt =45%

Proportion of capital projected funded by equity = 55%

Return received by bondholder = 0.08

Return received by stockholder = 0.14

Question 13

A project requires an initial outlay of $100,000 and is expected to generate annual net cash inflows of $28,000 for the next five years. Determine the payback period for the project.

Question 14

An investment project requires an initial outlay of $100,000, and is expected to generate annual cash inflows of $28,000 for the next five years, (round to the nearest tenth of the %). Determine the (internal rate of return) IRR for the project using a financial calculator.

A 12.0%

B 3.6%

C 12.6%

D 12.45

Question 15

Capital budgeting analysis of mutually exclusive project A and B yields the following

Project A Project B

IRR 18% 22%

NPV $270,000 $255,000

Payback Period 2.5 years 2.0 years

Management choose

A Project B because most executives prefer IRR methods

B Project B because two of 3 methods choose it

C Project B because NPV is the best method

Either project because the result arent consistent

Question 16

Christopher electronics bought new machinery for $5,075,000 million. This is expected to result in additional cash flows of $1,225,000 million over the next seven years. What is the payback period of this project? The acceptance period is five years.

Question 17

AMP, INC, has invested $2,165,800 on equipment. The firm use payback period criteria of not accepting any project that takes more than four years to recover cost. The company anticipated cash flow of $436,386, $512,178, $563,255, $764,997, $816,500 and $825,375 over the next six years. What is the payback period.