A 8.9 percent $1,000 bond matures in 17 years, pays interest

Question 1 

Connect with a professional writer in 5 simple steps

Please provide as many details about your writing struggle as possible

Academic level of your paper

Type of Paper

When is it due?

How many pages is this assigment?

ABC is reviewing a project that will cost $1,431.The project will produce cash flows $210 at the end of each year for the first two years and $772 at the end of each year for the next two years. What is the profitability index? Assume interest rate is 4%.

a. 1.56

b. 0.95

c. 1.22

d. 2.56

Question 2 

Suppose an investment offers to double your money in 39 years. What annual rate of return are you being offered if interest is compounded semi-annually?

a. 1.79%

b. 1.56%

c. 0.98%

d. 0.89%

Question 3 

How many years will it take to quadruple (i.e. 4 times) your money at 9% compounded quarterly? 

a. 7.2424

b. 15.5759

c. 5.6478

d. 3.3168

Question 4 

A bond is currently selling for $1,087. If the yield to maturity is 10%, the coupon rate will be:

a. less than 10%.

b. equal than 10%. 

c. more than 10%.

d. None above

Question 5 

Suppose the real rate is 9.83% and the inflation rate is 4.65%. Solve for the nominal rate.

a. 11.32%

b. 12.87%

c. 14.93%

d. 21.74%

Question 6 

An investment is acceptable if the profitability index (PI) of the investment is:

a. less than the net present value (NPV).

b. less than one.

c. greater than one.

d. greater than the internal rate of return (IRR).

e. greater than a pre-specified rate of return. 

Question 7 

A 8.9 percent $1,000 bond matures in 17 years, pays interest semiannually, and has a yield to maturity of 16.02 percent. What is the current market price of the bond? 

a. $587.92

b. $456.23

c. $143.24

d. $693.22

Question 8 

Uptown Insurance offers an annuity due with semi-annual payments for 19 years at 4.9 percent interest. The annuity costs $176,239 today. What is the amount of each annuity payment? 

a. $7,008.06

b. $5,670.26

c. $8,300.23

d. $4,607.98

Question 9 

ABC’s last dividend paid was $4.4, its required return is 13%, its growth rate is 6%, and its growth rate is expected to be constant in the future. What is ABC’s expected stock price in 19 years?

a. $104.37

b. $201.59

c. $98.15

d. $120.31

Question 10 

Given the following cash flows, calculate the payback period:

Year CF

0 -921

1 368

2 253

3 291

4 784

a. 3.0115

b. 3

c. 2.0125

d. 4.5209

Question 11 

A stock just paid a dividend of D0 = $3.4. The required rate of return is rs = 15.8%, and the constant growth rate is g = 3%. What is the current stock price?

a. $35.76

b. $24.469

c. $3.45

d. $27.359

Question 12 

Suppose that today’s stock price is $49.8. If the required rate on equity is 18.6% and the growth rate is 7.9%, compute the expected dividend (i.e. compute D1)

a. $7.2447

b. $10.6483

c. $5.3286

d. $2.5643

Question 13 

The common stock of ABC Industries is valued at $49 a share. The company increases their dividend by 3.1 percent annually and expects their next dividend to be $1.84. What is the required rate of return on this stock?

a. 2.82%

b. 3.61%

c. 4.87%

d. 6.86%

Question 14 

The ABC Co. has $1,000 face value stock outstanding with a market price of $937.6. The stock pays interest annually, matures in 9 years, and has a yield to maturity of 10.7 percent. What is the current yield?

a. 5.11%

b. 10.22%

c. 7.34%

d. 14.94%

Question 15 

The principal amount of a bond that is repaid at the end of term is called the par value or the:

a. call premium

b. perpetuity value

c. face value

d. back-end value

e. coupon value

Question 16 

What is the effective rate of 18% compounded monthly? 

a. 26.97%

b. 13.56%

c. 17.46%

d. 19.56%

Question 17 

A project has the following cash flows. What is the internal rate of return?

Year 0 1 2 3 

Cash flow -$121,000 68,150 $42,200 $39,100

a. 12.71%

b. 14.39%

c. 13.47%

d. 13.85%

e. 14.82%

Question 18 

A cost that has already been incurred and cannot be recouped is called as a(n): 

a. sunk cost

b. financial cost

c. opportunity cost

d. side cost

e. relevant cost

Question 19 

ABC Corp. just paid a dividend of $2.4 per share at the end of the year. The stock has a required rate of return is 18%. The dividend is expected to grow at 6.9%. What is dividend at time = 8? (solve for D8?)

a. $7.667

b. $3.175

c. $6.451

d. $4.093

Question 20 

What is the net present value of the following cash flows? Assume an interest rate of 3.5%

Year CF

0 -$11,895

1 $7,722

2 $5,687

3 $5,120

a. $5,492.69

b. $17,387.92

c. $6,247.34

d. $8,235.81

Question 21 

A bond that sells for less than face value is called as:

a. discount bond

b. premium bond

c. par value bond

d. debenture