ACCT 4023 - A new project is being considered by Stanton Corp.

A new project is being considered by Stanton Corp. An outlay of $40,000 is required for equipment and an additional net working capital investment of $1000 is required. What is the total cost at time zero of accepting this project?

40,000

41,000

30,000

31,000

Insufficient information to answer

Assume that you invested $5000 in an account that is expected to average 10% return per year for the next 30 years. How much do you expect to have in the account at the end of the 30 years?

5,000

87,247

150,000

822,470

insufficient information to compute

Assume D4 ( I.e., the dividend at end of period 4) is expected to be $2.00 and is forecasted to grow at a constant rate of 6.5%. If investors' required return is 8.6%, what is P3 (i.e., expected price at the end of period 3)?

0.95

2.00

23.26

30.77

95.24

Insufficient information to compute

Assume the risk free rate is 4.5% and the expected return on the market is 14%. Based on the CAPM, what should be the rate of return for security having a beta of 1.25?

11.88%

16.38%

18.5%

17.5%

22%

You currently earn $35,000 per year. If your salary grows at an assumed 3.5% average inflation rate, how much will your annual salary be in 25 years?

$82,713

$79,916

$1,363,245

$1,445,960

Insufficient information to compute

Assume the following regarding a growing annuity valuation problem:

Your salary at the end of the last year that you work is $90,000.

You would like your income stream to begin at the end of your first year of retirement with a payment equal to 70% of your last working year's salary. (Assume all amounts are "end-of-year" payments.)

You plan to be retired for 25 years.

You would like your retirement income will grow at a constant rate equal to a 3.5% (to compensate for expected inflation).

Using a discount rate of 8%, what is the present value at the beginning of your first year of retirement, (i.e. one period prior to the first retirement payment) of your projected 25 year retirement income stream?

960,730

916,893

672,511

211,573

3,308,543

483,107