Question 11

The Sentinel Corporation has an issue of preferred stock that pays a dividend of $5.00 a share. If the appropriate cost of capital is 12%, what would you expect the market price of this stock to be? Round you answer to the nearest cent.

Question 11 options:

A)$60.00

B)$24.00

C)$22.41

D)$41.67

Question 12

Bond analysis is both quantitative and qualitative. True or false?

Question 12 options:

True

False

Question 13

Joe Cool plans to hit the campus scene. He expects his tuition for each of the next four years to be $2,000, payable at the end of each year. (Hes cool, not smart.) At a 6% annual interest rate, how much would have to be invested today to provide for all his future tuition payments? Round your answer to the nearest dollar.

Question 13 options:

A)$8,000

B)$7,346

C)$6,930

D)$2,525

Question 14

A financial planner has suggested you invest in a new insurance product he is selling that will pay you $20,000 a year for twenty years once you retire. If you plan to retire in 10 years and your opportunity cost of capital is a constant 6% a year, what is the most you should pay today for this investment? Assume you will receive your first payment at the end of 10 years and round your answer to the nearest dollar.

Question 14 options:

A)$229,398

B)$128,095

C)$135,781

D)$147,202

Question 15

When your firm hires a new employee this year, it is obligated to contribute $5,000 to a defined contribution plan for that employee, one year after the hire date. The contribution must be adjusted annually for inflation. Assume that inflation will be a constant 2.5% a year from this point forward. What is the cost to you of hiring a 30 -year old who will be with the company for 32 years if the appropriate discount rate is 10%? Round your answer to the nearest dollar.

Question 15 options:

A)$66,667

B)$68,333

C)$59,708

D)$58,653