Nova Southeastren University Spring 2015 Finace Fin5080 Quiz 1,2,3,4,5, &6

 Nova Southeastren University Spring 2015 Finace Fin5080 Quiz 1

· Question 1

1 out of 1 points

	Which one of the following indicates that a project is expected to create value for its owners?

· Question 2

1 out of 1 points

	What is the net present value of a project with the following cash flows if the discount rate Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

· Question 3

0 out of 1 points

	What is the Modified Internal Rate of Return (MIRR) for the following cash flows? Assume that the required rate of return is 4%

· Question 4

1 out of 1 points

	A project has the following cash flows. What is the payback period?

· Question 5

1 out of 1 points

	What is the Internal Rate of Return (IRR) for the following cash flows?

· Question 6

0 out of 1 points

.

	What is the profitability index of a project with the following cash flows if the discount rate is 15 percent?

· Question 7

0 out of 1 points

	ABC Inc. is considering a project with an initial cost of $1,246. The project will not produce any cash flows for the first three years. Starting in year four, the project will produce cash inflows of $655 a year for three years. This project is risky, so the firm has assigned it a discount rate of 13 percent. What is the project's net present value? Enter your answer rounded off to two decimal points. Do not enter $ or comma in the

· Question 8

1 out of 1 points

	What is the profitability index of a project with the following cash flows if the discount rate is 6 percent?

· Question 9

1 out of 1 points

	What is the net present value of a project with the following cash flows if the discount rate is 14 percent?

· Question 10

1 out of 1 points

	Which one of the following is generally considered to be the best form of analysis if you have to select a single method to analyze a variety of investment opportunities?
Selected Answer:

· Question 11

1 out of 1 points

.

	What is the profitability index of a project with the following cash flows if the discount rate is 5 percent?

· Question 12

1 out of 1 points

	A project has the following cash flows. What is the payback period?

· Question 13

1 out of 1 points

	What is the net present value of a project with the following cash flows if the discount rate is 14 percent?

· Question 14

1 out of 1 points

	Which one of the following methods of analysis ignores the time value of money?
Selected Answer:

· Question 15

1 out of 1 points

	Which of the following is the correct definition of Internal Rate of Return (IRR)?

Nova Southeastren University Spring 2015 Finace Fin5080 Quiz 2

• Question 1

0 out of 1 points

ABC has a proposed project which will generate sales of 133 units at a selling price of $286 each. The fixed costs are $23,462 and the variable costs per unit are $78. The project requires $185,974 of machinery which will be depreciated on a straight-line basis over the 5-year life of the project. The tax rate is 29%. What is the operating cash flow for year 5?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Selected Answer: [

Or,

(Sales-Variable Costs-Fixed Costs-Depreciation)*(1-tax rate) + Depreciation = Annual Operating CFs

• Question 2

1 out of 1 points

The net working capital invested in a project is generally:

Selected Answer:

• Question 3

0 out of 1 points

A project has an annual operating cash flow of $13,180. Initially, this 4-year project required $3,885 in net working capital, which is recoverable when the project ends. The firm also spent $10,000 on equipment to start the project. This equipment will have a book value of $3,386 at the end of year 4. What is the total cash flow for year 4 of the project if the equipment can be sold for $5,813 and the tax rate is 26%?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Selected Answer:

• Question 4

0 out of 1 points

A project has an initial requirement of $234,433 for new equipment and $9,764 for net working capital. The fixed assets will be depreciated to a zero book value over the 3-year life of the project and have an estimated salvage value of $90,213. All of the net working capital will be recouped at the end of the project. The annual operating cash flow is $76,816 and the cost of capital is 10% What is the project's NPV if the tax rate is 29%?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Selected Answer: [

• Question 5

0 out of 1 points

ABC Company purchased some new equipment 2 years ago for $175,870. Today, it is selling this equipment for $73,998. What is the aftertax cash flow from this sale if the tax rate is 25 percent? The MACRS allowance percentages are as follows, commencing with year one: 20.00, 32.00, 19.20, 11.52, 11.52, and 5.76 percent.

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 6

0 out of 1 points

Which of the following cash flows are NOT considered in the calculation of the initial outlay for a capital investment proposal?

Selected Answer:

• Question 7

1 out of 1 points

ABC Compay has the following projections for Year 1 of a capital budgeting project.

Year 1 Incremental Projections:

Sales $702,819

Variable Costs $128,606

Fixed Costs $21,467

Depreciation Expense $42,997

Tax Rate 28%

Calculate the operating cash flow for Year 1.

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 8

1 out of 1 points

A project requires $340,508 of equipment that is classified as 7-year property. What is the book value of this asset at the end of year 5 given the following MACRS depreciation allowances, starting with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Selected Answer:

• Question 9

1 out of 1 points

A project requires $489,386 of equipment that is classified as 7-year property. What is the book value of this asset at the end of year 3 given the following MACRS depreciation allowances, starting with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Selected Answer:

• Question 10

1 out of 1 points

Sunk costs are a type of incremental cash flow that should be included in all capital-budgeting decisions.

Selected Answer:

• Question 11

0 out of 1 points

ABC Company purchased $32,228 of equipment 5 years ago. The equipment is 7-year MACRS property. The firm is selling this equipment today for $9,283. What is the aftertax cash flow from this sale if the tax rate is 38 percent? The MACRS allowance percentages are as follows, commencing with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent.

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Selected Answer:

• Question 12

0 out of 1 points

ABC Inc. has estimated the following revenues and expenses related phase I of a proposed new housing development? Incremental sales= $6,311,329, total cash expenses $3,604,173, depreciation $689,097, taxes 28%, interest expense, $200,000. What are the operating cash flows?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 13

0 out of 1 points

ABC Inc. has estimated the following revenues and expenses related phase I of a proposed new housing development? Incremental sales= $554,021, total cash expenses $388,188, depreciation $65,276, taxes 39%. What are the operating cash flows?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 14

0 out of 1 points

ABC Corporation is considering an expansion project. The necessary equipment could be purchased for $18,698 and shipping and installation costs are another $1,287. The project will also require an initial $3,443 investment in net working capital. The company's tax rate is 40%. What is the project's initial investment outlay?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 15

0 out of 1 points

A project has an initial requirement of $214,581 for new equipment and $11,276 for net working capital. The installation costs to get the new equipment in working condition are 12,523. The fixed assets will be depreciated to a zero book value over the 4-year life of the project and have an estimated salvage value of $75,213. All of the net working capital will be recouped at the end of the project. The annual operating cash flow is $112,818 and the cost of capital is 10% What is the project's NPV if the tax rate is 37%?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 16

0 out of 1 points

ABC Company purchased $18,180 of equipment 4 years ago. The equipment is 7-year MACRS property. The firm is selling this equipment today for $7,727. What is the aftertax cash flow from this sale if the tax rate is 39 percent? The MACRS allowance percentages are as follows, commencing with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent.

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 17

0 out of 1 points

ABC Company has a proposed project that will generate sales of 433 units annually at a selling price of $192 each. The fixed costs are $5,230 and the variable costs per unit are $120. The project requires $24,691 of equipment that will be depreciated on a straight-line basis to a zero book value over the 4-year life of the project. The salvage value of the fixed assets is $6,900 and the tax rate is 37 percent. What is the operating cash flow for year four?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Selected Answer:

• Question 18

1 out of 1 points

A project requires $320,027 of equipment that is classified as 7-year property. What is the depreciation expense in year 3 given the following MACRS depreciation allowances, starting with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Selected Answer:

Nova Southeastren University Spring 2015 Finace Fin5080 Quiz 3

• Question 1

1 out of 1 points

Suppose a stock had an initial price of $92.58 per share, paid a dividend of $7.9 per share during the year, and had an ending share price of $85.61. What are the dollar returns?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 2

1 out of 1 points

A portfolio is invested 45.7% in Stock A, 24.8% in Stock B, and the remainder in Stock C. The expected returns are 17.1%, 31.9%, and 24.6% respectively. What is the portfolio's expected returns?

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 12.345% then enter as 12.35 in the answer box.

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• Question 3

1 out of 1 points

Calculate the expected returns of your portfolio

Stock Invest Exp Ret

A $427 3.6%

B $921 16.7%

C $330 28.7%

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 12.345% then enter as 12.35 in the answer box.

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• Question 4

1 out of 1 points

You own a portfolio invested 24.29% in Stock A, 18.44% in Stock B, 20.36% in Stock C, and the remainder in Stock D. The beta of these four stocks are 1.12, 0.82, 0.93, and 1.04. What is the portfolio beta?

Note: Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

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• Question 5

1 out of 1 points

Suppose a stock had an initial price of $66.22 per share, paid a dividend of $4.3 per share during the year, and had an ending share price of $84.92. What are the percentage returns?

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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• Question 6

1 out of 1 points

You have observed the following returns on ABC's stocks over the last five years:

3.1%, 8.1%, -9.5%, 13.6%, -8.4%

What is the arithmetic average returns on the stock over this five-year period.

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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• Question 7

1 out of 1 points

You own a portfolio invested 27.92% in Stock A, 14.9% in Stock B, 29.85% in Stock C, and the remainder in Stock D. The beta of these four stocks are 1.31, 0.38, 0.23, and 1.47. What is the portfolio beta?

Note: Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

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• Question 8

0 out of 1 points

Suppose a stock had an initial price of $80.92 per share, paid a dividend of $6.2 per share during the year, and had an ending share price of $94.66. What are the percentage returns if you own 25 shares?

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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• Question 9

1 out of 1 points

Suppose the returns for Stock A for last six years was 4%, 7%, 8%, -2%, 9%, and 7%.

Compute the standard deviation of the returns.

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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• Question 10

1 out of 1 points

Based on the following information, calculate the expected returns:

Prob Return

Recession 30% 7.3%

Boom 70% 14.7%

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 12.345% then enter as 12.35 in the answer box.

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• Question 11

1 out of 1 points

Suppose a stock had an initial price of $78.1 per share, paid a dividend of $9.1 per share during the year, and had an ending share price of $92.31. If you own 200 shares, what are the dollar returns?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 12

0 out of 1 points

Calculate the expected returns of your portfolio

Stock Invest Exp Ret

A $334 8.6%

B $706 16.3%

C $1,853 27.2%

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 12.345% then enter as 12.35 in the answer box.

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• Question 13

1 out of 1 points

Suppose a stock had an initial price of $86.87 per share, paid a dividend of $8.9 per share during the year, and had an ending share price of $99.33. What are the percentage returns?

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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• Question 14

0 out of 1 points

Suppose the real rate is 5.9% and the nominal rate is 14.11%. Solve for the inflation rate. Use the Fisher Effect equation.

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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• Question 15

1 out of 1 points

The stock of Billingsley United has a beta of 0.92. The market risk premium is 8.4 percent and the risk-free rate is 3.2 percent. What is the expected return on this stock?

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• Question 16

1 out of 1 points

Portfolio diversification eliminates which one of the following?

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• Question 17

1 out of 1 points

Standard deviation measures _____ risk while beta measures _____ risk.

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• Question 18

1 out of 1 points

You own a portfolio of two stocks, A and B. Stock A is valued at $6,540 and has an expected return of 11.2 percent. Stock B has an expected return of 8.1 percent. What is the expected return on the portfolio if the portfolio value is $9,500?

Selected Answer:

• Question 19

1 out of 1 points

What is the beta of the following portfolio?

Selected Answer:

1

• Question 20

0 out of 1 points

A $36,000 portfolio is invested in a risk-free security and two stocks. The beta of stock A is 1.29 while the beta of stock B is 0.90. One-half of the portfolio is invested in the risk-free security. How much is invested in stock A if the beta of the portfolio is 0.58?

Selected Answer:

• Question 21

1 out of 1 points

You own a portfolio that has $1,900 invested in Stock A and $2,700 invested in Stock B. If the expected returns on these stocks are 9 percent and 15 percent, respectively, what is the expected return on the portfolio?

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• Question 22

1 out of 1 points

What is the beta of the following portfolio?

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• Question 23

1 out of 1 points

The systematic risk is same as:

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• Question 24

1 out of 1 points

If markets are efficient, the difference between the instrinsic value and the market value of the comapny's security is:

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• Question 25

1 out of 1 points

Semi-strong-form efficient markets are not weak-form efficient.

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Nova Southeastren University Spring 2015 Finace Fin5080 Quiz 4

• Question 1

0 out of 1 points

ABC is expected to pay a dividend of $3 per share at the end of the year. The stock sells for $51 per share, and its required rate of return is 12.8%. The dividend is expected to grow at some constant rate, g, forever. What is the growth rate (i.e. solve for g)?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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• Question 2

1 out of 1 points

ABC has issued a bond with the following characteristics:

Par: $1,000; Time to maturity: 14 years; Coupon rate: 9%;

Assume annual coupon payments. Calculate the price of this bond if the YTM is 8.14%

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 3

1 out of 1 points

ABC's last dividend was $2.7. The dividend growth rate is expected to be constant at 30% for 3 years, after which dividends are expected to grow at a rate of 5% forever. If the firm's required return (rs) is 11%, what is its current stock price (i.e. solve for Po)?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 4

1 out of 1 points

A stock just paid a dividend of D0 = $1.2. The required rate of return is rs = 19.6%, and the constant growth rate is g = 7.4%. What is the current stock price?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 5

1 out of 1 points

The common stock of Connor, Inc., is selling for $55 a share and has a dividend yield of 2.2 percent. What is the dividend amount?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 6

0 out of 1 points

BCD’s $1,000 par value bonds currently sell for $798.40. The coupon rate is 10%, paid semi-annually. If the bonds have 5 years to maturity, what is the yield to maturity?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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• Question 7

1 out of 1 points

ABC has issued a bond with the following characteristics:

Par: $1,000; Time to maturity: 9 years; Coupon rate: 11%;

Assume semi-annual coupon payments. Calculate the price of this bond if the YTM is 5.12%

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 8

1 out of 1 points

ABC's bonds have a 9.5 percent coupon and pay interest semi-annually. Currently, the bonds are quoted at 106.315 percent of par value. The bonds mature in 8 years. What is the yield to maturity?

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• Question 9

0 out of 1 points

The 13.7 percent coupon bonds of the Peterson Co. are selling for $819.98. The bonds mature in 5 years and pay interest semi-annually. These bonds have current yield of _____ percent.

Enter your answer in percentages rounded off to two decimal points.

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• Question 10

0 out of 1 points

ABC Inc., is expected to pay an annual dividend of $2.9 per share next year. The required return is 12 percent and the growth rate is 8 percent. What is the expected value of this stock five years from now?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 11

1 out of 1 points

The 11.82 percent, $1,000 face value bonds of Tim McKnight, Inc., are currently selling at $930.02. What is the current yield?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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• Question 12

1 out of 1 points

The yield to maturity on a Marshall Co. premium bond is 7.6 percent. This is the:

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• Question 13

1 out of 1 points

The 8 percent coupon bonds of the Peterson Co. are selling for 98 percent of par value. The bonds mature in 5 years and pay interest semi-annually. These bonds have a yield to maturity of _____ percent.

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• Question 14

0 out of 1 points

ABC Enterprises' stock is expected to pay a dividend of $0.5 per share. The dividend is projected to increase at a constant rate of 8.8% per year. The required rate of return on the stock is 14.1%. What is the stock's expected price 3 years from today (i.e. solve for P3)?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 15

0 out of 1 points

If D1 = $5.1, g (which is constant) = 7.2%, and P0 = $72.7, what is the stock’s expected total return for the coming year?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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• Question 16

0 out of 1 points

Assume that you wish to purchase a 14-year bond that has a maturity value of $1,000 and a coupon interest rate of 7%, paid semiannually. If you require a 5.11% rate of return on this investment (YTM), what is the maximum price that you should be willing to pay for this bond? That is, solve for PV.

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 17

1 out of 1 points

ABC Enterprises' stock is currently selling for $64.5 per share. The dividend is projected to increase at a constant rate of 5.8% per year. The required rate of return on the stock is 12%. What is the stock's expected price 5 years from today (i.e. solve for P5)?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 18

0 out of 1 points

If last dividend = $4.6, g = 8.2%, and P0 = $69.8, what is the stock’s expected total return for the coming year?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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• Question 19

0 out of 1 points

You paid $1,128 for a corporate bond that has a 6.64% coupon rate. What is the current yield?

Hint: if nothing is mentioned, then assume par value = $1,000

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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• Question 20

0 out of 1 points

ABC just paid a dividend of D0 = $0.6. Analysts expect the company's dividend to grow by 34% this year, by 24% in Year 2, and at a constant rate of 7% in Year 3 and thereafter. The required return on this stock is 15%. What is the best estimate of the stock’s current market value?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Selected Answer:

.

• Question 21

1 out of 1 points

A premium bond is a bond that:

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• Question 22

0 out of 1 points

A firm's bonds have maturity of 10 years with a $1000 face value, an 8% semi-annual coupon, are callable in 5 years, at $1,050, and currently sells at a price of $1,100. What is the yield to call (YTC)?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

Selected Answer: [

• Question 23

0 out of 1 points

If D1 = $4.86, g (which is constant) = 2%, and P0 = $81.65, what is the stock’s expected dividend yield for the coming year?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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• Question 24

0 out of 1 points

ABC wants to issue 12-year, zero coupon bonds that yield 8.63 percent. What price should they charge for these bonds if they have a par value of $1,000? That is, solve for PV. Assume annual compounding.

Hint: zero coupon bonds means PMT = 0

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 25

0 out of 1 points

ABC Company's last dividend was $5.1. The dividend growth rate is expected to be constant at 22% for 2 years, after which dividends are expected to grow at a rate of 7% forever. The firm's required return (rs) is 12%. What is its current stock price (i.e. solve for Po)?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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ABC Corp. issued 15-year bonds 2 years ago at a coupon rate of 10.6%. The bonds make semi-annual payments. If these bonds currently sell for 97% of par value, what is the YTM?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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• Question 27

0 out of 1 points

The common stock of Wetmore Industries is valued at $44.5 a share. The company increases their dividend by 5.8 percent annually and expects their next dividend to be $3.2. What is the required rate of return on this stock?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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• Question 28

0 out of 1 points

ABC's stock has a required rate of return of 12.9%, and it sells for $52 per share. The dividend is expected to grow at a constant rate of 8.4% per year. What is the expected year-end dividend, D1?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 29

0 out of 1 points

ABC's Inc.'s bonds currently sell for $1,280 and have a par value of $1,000. They pay a $135 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,050. What is their yield to call (YTC)?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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• Question 30

1 out of 1 points

The rate required in the market on a bond is called the:

Selected Answer:

yield to maturity

Answers:

• Question 31

0 out of 1 points

ABC’s last dividend paid was $1.6, its required return is 19.3%, its growth rate is 3.6%, and its growth rate is expected to be constant in the future. What is Sorenson's expected stock price in 7 years, i.e., what is P7?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 32

0 out of 1 points

A stock is expected to pay a dividend of $0.9 at the end of the year. The required rate of return is rs = 15.6%, and the expected constant growth rate is g = 7.7%. What is the stock's current price?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 33

0 out of 1 points

Stealers Wheel Software has 8.96% coupon bonds on the market with nine years to maturity. The bonds make semi-annual payments and currently sell for 110.65% of par. What is the current yield?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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Nova Southeastren University Spring 2015 Finace Fin5080 Quiz 5

• Question 1

0 out of 1 points

ABC Company sells 3,381 chairs a year at an average price per chair of $166. The carrying cost per unit is $31.67. The company orders 500 chairs at a time and has a fixed order cost of $119 per order. The chairs are sold out before they are restocked. What is the economic order quantity?

Enter your answer rounded off to two decimal points. Do not enter comma in the answer box. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

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• Question 2

0 out of 1 points

Which one of the following is most indicative of a flexible short-term financial policy?

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• Question 3

0 out of 1 points

Month Sales $ Month Sales $

Jan 20,912 July 48,141

Feb 31,433 Aug 22,614

Mar 22,614 Sep 20,912

Apr 48,141 Oct 22,614

May 20,912 Nov 31,433

June 31,433 Dec 48,141

• Question 4

1 out of 1 points

ABC Company writes 252 checks a day for an average amount of $380 each. These checks generally clear the bank in 2 days. In addition, the firm generally receives an average of $146,088 a day in checks that are deposited immediately. Deposited funds are available in 1 days. What is the firm's net float?

Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

• Question 5

0 out of 1 points

On July 15th, you purchased $10,000 worth of goods. The terms of the sale were 1/9, net 50. What is the effective annual rate of interest for the credit period for this sale?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

• Question 6

0 out of 1 points

ABC Company sells 4,676 chairs a year at an average price per chair of $136. The carrying cost per unit is $25.71. The company orders 461 chairs at a time and has a fixed order cost of $83.4 per order. The chairs are sold out before they are restocked. What are the total shortage costs?

Enter your answer rounded off to two decimal points. Do not enter comma or $ in the answer box. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

• Question 7

1 out of 1 points

Which of the following is a Source of Cash? Choose only one.

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• Question 8

1 out of 1 points

As of this morning, your firm had a ledger balance of $4,402 with no outstanding deposits or checks. Today, your firm deposited 4 checks in the amount of $161 each and wrote a check in the amount of $660. What is the amount of the collection float as of the end of the day?

Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 9

1 out of 1 points

Compute the cash cycle based on the following information:

Average Collection Period = 55

Accounts Payable Period = 44

Average Age of Inventory = 49

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• Question 10

1 out of 1 points

Identify a source of cash from below. Choose only one.

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• Question 11

0 out of 1 points

The terms of the sale were 1/6, net 44. What is the effective annual rate of interest?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

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• Question 12

1 out of 1 points

Identify which of the following will increase the operating cycle. Choose only one.

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• Question 13

0 out of 1 points

ABC Company has annual sales of $400,000 and cost of goods sold of $153,807. The accounts payable period is 37.07 days. What is the average accounts payable balance?

Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

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• Question 14

0 out of 1 points

ABC Company has an average collection period of 37 days and factors all of its receivables immediately at a 2 percent discount. Assume all accounts are collected in full. What is the firm's effective cost of borrowing?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

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• Question 15

0 out of 1 points

ABC Company sells 2,600 chairs a year at an average price per chair of $169. The carrying cost per unit is $28.9. The company orders 347 chairs at a time and has a fixed order cost of $69.9 per order. The chairs are sold out before they are restocked. What are the total carrying costs?

Enter your answer rounded off to two decimal points. Do not enter comma or $ in the answer box. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

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• Question 16

0 out of 1 points

Month Sales $ Month Sales $

Jan 21,547 July 23,343

Feb 38,922 Aug 43,327

Mar 43,327 Sep 21,547

Apr 23,343 Oct 43,327

May 21,547 Nov 38,922

June 38,922 Dec 23,343

• Question 17

0 out of 1 points

ABC Corporation currently has an inventory turnover of 23.46, a payables turnover of 16.61, and a receivables turnover of 17.87. How many days are in the cash cycle?

Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

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• Question 18

0 out of 1 points

ABC Company has annual sales of $466,446 and cost of goods sold of $198,600. The average accounts receivable balance is $68,027. How many days on average does it take the firm to collect its accounts receivable? Assume 365 days.

Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

Selected Answer:

)

• Question 19

0 out of 1 points

ABC Company has a cash cycle of 13.55 days, an operating cycle of 22.98 days, and an average collection period of 4 days. The company reported cost of goods sold of $287,825. What is the company's average balance in Accounts Payable?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box

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• Question 20

0 out of 1 points

ABC Corporation currently has an inventory turnover of 25.56, a payables turnover of 5.34, and a receivables turnover of 7.71. How many days are in the operating cycle?

Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

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• Question 21

0 out of 1 points

Compute the Accounts Payable (A/P) period based on the following information:

Average A/P balance = $36,501

Annual Cost of Goods Sold = $177,052

Assume 365 days

Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

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• Question 22

0 out of 1 points

Month Sales $ Month Sales $

Jan 42,044 July 43,112

Feb 44,224 Aug 23,256

Mar 23,256 Sep 42,044

Apr 43,112 Oct 23,256

May 42,044 Nov 44,224

June 44,224 Dec 43,112

• Question 23

0 out of 1 points

As of this morning, your firm had a ledger balance of $3,301 with no outstanding deposits or checks. Today, your firm deposited 2 checks in the amount of $357 each and wrote 8 checks in the amount of $639. What is the amount of the disbursement float as of the end of the day?

Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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• Question 24

0 out of 1 points

ABC Company sells 2,733 chairs a year at an average price per chair of $129. The carrying cost per unit is $33.54. The company orders 321 chairs at a time and has a fixed order cost of $71 per order. The chairs are sold out before they are restocked. How many orders will company place if it follows the economic order quantity model?

Enter your answer rounded off to two decimal points. Do not enter comma in the answer box. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

Selected Answer:

• Question 25

0 out of 1 points

Month Sales $ Month Sales $

Jan 39,325 July 21,408

Feb 15,199 Aug 44,977

Mar 44,977 Sep 39,325

Apr 21,408 Oct 44,977

May 39,325 Nov 15,199

June 15,199 Dec 21,408

Sales are collected as follows:

In the month of Sales: 30%

In the next month: 25%

After 2 months: 13%

After 3 months: remainder is collected

Calculate the cash collection for November.

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Selected Answer:

• Question 26

1 out of 1 points

Indicate the effect of the following on the cash cycle: Accounts payable turnover goes up

Selected Answer:

.

• Question 27

1 out of 1 points

Indicate the effect of the following on the operating cycle: Customers take longer to make the payment

Selected Answer:

Nova Southeastren University Spring 2015 Finace Fin5080 Quiz 6

Question 1

1 out of 1 points

Correct

Currently, you own 10% of the outstanding stock of ABC Company. The company has decided to issue additional shares of stock and has given you the first option to purchase 10% of those additional shares. Which one of the following will you be participating in if you opt to purchase the shares you have been offered?

Selected Answer:

Question 2

0 out of 1 points

Incorrect

The exchange rate is 1.0291 Swiss francs per U.S. dollar. How many U.S. dollars are needed to purchase 3,221 Swiss francs?

Enter your answer rounded off to two decimal points. Do not enter $ in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Selected Answer:

Question 3

1 out of 1 points

Correct

Suppose it takes 1.46 U.S. dollars today to purchase one British pound today. Currency forecasters predict that the U.S. dollar will depreciate by 18% against the pound over the next 30 days. What is the U.S. dollar/Euro exchange rate in 30 days?

Enter your answer rounded off to FOUR decimal points.

Selected Answer:

Question 4

1 out of 1 points

Correct

Suppose one U.S. dollar can purchase 139 yen today. If the yen depreciates by 2% tomorrow, how many yen could one U.S. dollar buy tomorrow?

Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

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Question 5

0 out of 1 points

Incorrect

In New York, you can exchange $1 for €0.8855 or £0.6781. Suppose that, in Berlin, £1 costs €1.2088. How much profit can you earn on $15,469 using triangle arbitrage?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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Question 6

1 out of 1 points

Correct

You just returned from a trip to Venezuela and have 5,645 bolivares fuertes in your pocket. How many dollars will you receive when you exchange this money if the U.S. dollar equivalent of the bolivares fuertes is 0.1491?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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Question 7

1 out of 1 points

Correct

Which one of the following is the name given to a registration of securities under SEC 415 which permits a firm to issue the securities over a two-year period?

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Question 8

1 out of 1 points

Correct

ABCUnderwriters retains the difference between its buying price and its offering price on new securities. What is this amount called?

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Question 9

1 out of 1 points

Correct

Suppose the exchange rate between U.S. dollars and Swiss francs is SF 1.2582 = $1.00, and the exchange rate between the U.S. dollar and the euro is $1.00 = 1.0539 euros. What is the cross-rate of Swiss francs to euros (SF/Euro)?

Enter your answer rounded off to FOUR decimal points.

Selected Answer:

Question 10

1 out of 1 points

Correct

Which one of the following terms is defined as an underwriting for which the underwriters assume full responsibility for any unsold shares?

Selected Answer:

Question 11

0 out of 1 points

Incorrect

You can exchange $1 for either C$1.1903 or ¥131.7. What is the cross rate between the Japanese yen and the Canadian dollar? That is, solve for ¥ per C$.

Enter your answer rounded off to two decimal points.

Selected Answer:

Question 12

0 out of 1 points

Incorrect

Your friend from Germany has decided to come and visit you in the United States. You estimate the cost of her trip at $7,126. What is the cost to her in euros if the U.S. dollar equivalent of the euro is 1.1021?

Selected Answer:

Question 13

1 out of 1 points

Correct

Suppose it takes 1.18 U.S. dollars today to purchase one British pound today. Currency forecasters predict that the U.S. dollar will depreciate by 15% against the pound over the next 30 days. What is the Euro/US Dollar exchange rate in 30 days?That is, how many euros can 1 dollar buy in 30 days?

Enter your answer rounded off to FOUR decimal points.

Selected Answer:

Question 14

1 out of 1 points

Correct

Venture capital is most appropriate to be the source of funding for which one of the following? Choose only one

Selected Answer:

Question 15

0 out of 1 points

Incorrect

Suppose the exchange rate between U.S. dollars and Swiss francs is SF 1.2691 = $1.00, and the exchange rate between the U.S. dollar and the euro is $1.00 = 0.9076 euros. What is the cross-rate of euros to Swiss francs (Euro/SF)?

Enter your answer rounded off to FOUR decimal points.

Selected Answer: