Finance Problems Assignment

A $1,000 face value bond currently has a yield to maturity of 6.59 percent. The bond matures in 3 years and pays interest annually. The coupon rate is 7 percent. What is the current price of this bond?

A 9-year project is expected to generate annual revenues of $114,500, variable costs of $73,600, and fixed costs of $14,000. The annual depreciation is $3,500 and the tax rate is 34 percent. What is the annual operating cash flow?

Healthy Foods just paid its annual dividend of $1.45 a share. The firm recently announced that all future dividends will be increased by 2.5 percent annually. What is one share of this stock worth to you if you require a 14 percent rate of return?

Keller Metals common stock is selling for $38 a share with a historical growth rate of 2 percent and has a dividend yield of 3.2 percent. What is the dividend amount?

Soft and Cuddly is considering a new toy that will produce the following cash flows. Should the company produce this toy if the firm requires a 15 percent rate of return?

Year Cash Flow
0 -$ 31,000
1 26,000
2 9,000

The Pancake House pays a constant annual dividend of $1.50 per share. How much are you willing to pay for one share if you require a 15 percent rate of return?

What is the net present value of a project with the following cash flows if the discount rate is 13 percent?

Year Cash Flow
0 -$ 39,400
1 12,800
2 21,700
3 18,100

Given the same cash flows as the last question, what is the Internal Rate of Return (IRR)?

0 -39,400
1 12,800
2 21,700
3 18,100

You are analyzing a project and have developed the following estimates. The depreciation is $19,800 a year and the tax rate is 34 percent. What is the best case operating cash flow?

Base Case Lower Bound Upper Bound
Unit Sales 4,400 3,800 4,900
Sales Price $62 $59 $65
Variable Costs per Unit $47 $44 $50
Fixed Costs $23,000 $21,500 $24,500