You have won the lottery and will receive 15 annual payments of $20,000 starting today! If you can invest these payments at 10%, what is the value of your winnings at the end of 15 years (Round to the nearest dollar)?

Zell wants to have a million dollars at retirement, which is 12 years away. He already has $250,000 in an IRA earning 9 percent annually. How much does he need to save each year, beginning at the end of this year to reach his target? Assume he could earn 9 percent on any investment he makes. (Round to the nearest dollar.)

Irvine is planning to invest in a 15-year bond that pays a 11 percent coupon. The current market rate for similar bonds is 8 percent. Assume semiannual coupon payments. What is the price of this bond? Will Irvine buy this bond if its price is $1,200 (Round to the nearest dollar.)

Quistis is planning to buy a 10-year bond that pays a coupon of 12 percent semiannually. Given the current price of $900, what is the yield to maturity on these bonds?

Seven years ago, Shirley Harper bought a 15-year bond that pays 9 percent semiannually for $850. Today, she sold it for $1,150. What is the realized yield on her investment? (Round to the nearest percent.)

A share of common stock just paid a dividend of $4.50. The expected long-run growth rate for the stock is 20%. If investors require a rate of return of 25%, what should be the price of the stock today? Will you buy the stock if it is currently selling for $105?

The Gadget Co. has issued perpetual preferred stock with a $100 par value and a dividend of 12%. What is the current price of this preferred stock given a required rate of return of 15 percent?

Next year Balamb Traders will pay a dividend of $2.00. The dividend is expected to grow 4% each year for the next three years. If their required rate of return is 15 percent, what is the present value of their dividends over the next four years?

A machine costs $1,500 and has a 3-year life. The estimated salvage value at the end of three years is $200. The project is expected to generate after tax-cash flows of $500 per year. If the required rate of return is 8%, what is the NPV of the project? Will you accept this project?

Umbrella Corp. is adding a new assembly line at a cost of $10 million. The firm expects the project to generate cash flows of $3 million, $4 million, $5 million over the next three years. Its cost of capital is 18 percent.

What is the MIRR on this project? If the required rate of return is 20 percent, should the project be accepted? (Round to the nearest percent.)

What is the payback period for a $25,000 project that is expected to return $7000 for the first two years and $4000 for years three through five? If the acceptance period is 5 years, will this project be accepted?

Esthar, Inc. had annual sales of $12 million with associated costs of $5 million during 2010. The firm invested $6 million in fixed assets and $400,000 in NWC during the year. The project has a 3-year life (straight-line depreciation to zero book value). The marginal tax rate is 30 percent. What is the cash flow from operations for 2010?

What is Esthar, Inc.s free cash flow for 2010?

A firm is considering taking a project that will produce $15 million of revenue per year. Cash expenses will be $6 million, and depreciation expenses will be $2 million per year. If the firm takes that project, then it will reduce the cash revenues of an existing project by $3 million. What is the free cash flow on the project, per year, if the firm is in the 30 percent marginal tax rate?

Marginal and average tax rates: Use the tax rate taken from Exhibit 11.6 to calculate the total taxes paid for Square, Inc., this year. Squares pretax income was $400,000. (Use the tax income Table, slide 44, Review_AllChapters)

You are deciding to invest in an asset which is expected to create operating cash flows of $5,000 a year for three years. The cost of the asset is $10,000. At time 0, an additional working capital of $2,000 will be required. This working capital will be recovered in the last year of the project. The required rate of return is 11%. Should you invest in the project?

A stock has a beta of 1.8, its expected return is 16%, the risk-free rate is 5. What is the market rate of return?

Winhill Corporation has semiannual bonds outstanding with 10 years to maturity and are currently priced at $800. If the bonds have a coupon rate of 8 percent, then what is the after-tax cost of debt for Beckham if its marginal tax rate is 30%? Assume that your calculation is made as on Wall Street.

Assume that your calculation in question 20 is made using the effective annual yield (EAY) for the bond.

Edea, Inc., has a beta of 1.5 and is trying to calculate its cost of equity capital. If the risk-free rate of return is 7 percent and the market risk premium is 4 percent, then what is the firm's after-tax cost of equity capital if the firm's marginal tax rate is 40 percent?

Garnet, Inc., is expected to pay a dividend of $3.00 one year from today. If the firm's growth in dividends is expected to remain at a flat 4 percent forever, then what is the cost of equity capital for Gangland if its stock price today is $18.00?

Cid, Inc., has found that its cost of common equity capital is 15 percent and its cost of debt capital is 7 percent. If the firm is financed with $4,000,000 of common shares (market value) and $4,000,000 of debt, then what is the after-tax weighted average cost of capital for Maloney's if it is subject to a 30 percent marginal tax rate