FINA5103N01-22937 Exam 1 Edwards Electronics recently reported $687 of sales, $219 of operating costs other than depreciation, and $141 of depreciation. The company had no amortization charges and interest payments, and its federal-plus-state income tax rate was 37%. Its net cash flow is $___________? (answer in two decimal numbers) Answer: An annual coupon bond that matures in 11 years sells for $1,217.23. It has a face value of $1,000 and a yield to maturity of 11 percent. What is its current yield (CY)? Choose one answer. a. 14.50% b. 21.72% c. 11.91% d. 11.00% e. 10.12% Marks: 4 Suppose a bank offers to lend you $10,000 for 1 year on a loan contract that calls for you to make interest payments of $250.00 at the end of each quarter and then pay off the principal amount at the end of the year. What is the effective annual rate on the loan? Choose one answer. a. 8.46% b. 8.90% c. 9.37% d. 9.86% e. 10.38% Marks: 4 HHH Inc. reported $158 of NOPAT. The company has current assets of $494 and current liabilities of $110. The fixed asset of the firm is $942. The weighted average cost of that capital (the WACC) was 15%. The HHH's Economic Value Added (EVA) is $___________? (answer in two decimal numbers) Answer: Sweeney Sailboats’ bonds have 20 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 10 percent; and the yield to maturity is 9.5 percent. What is the bond’s current market price? Choose one answer. a. $881.24 b. $1,114.54 c. $1,044.06 d. $1,000.00 e. $1,100.00 Marks: 4 What is the present value of a perpetuity that pays $3,800 per year if the discount rate is 5 percent? Choose one answer. a. $60,040.00 b. Infinity) c. $95,000.00 d. $3,619.05 e. $76,000.00 What is the present value of a security that will pay $14,000 in 30 years if securities of equal risk pay 6 percent annually? Choose one answer. a. $13,207.55 b. $7,756.27 c. $80,408.88 d. $2,437.54 e. $11,200.00 Kiev Corporation’s outstanding bonds have a $1,000 par value, a 12 percent semiannual coupon, 19 years to maturity, and an 8.5 percent yield to maturity (YTM). What is the bond’s price? Choose one answer. a. $719.13 b. $1,327.09 c. $1,000.00 d. $1,324.37 e. $1,225.04 A firm’s bonds have a maturity of 15 years with a $1,000 face value, a 13 percent semiannual coupon, are callable in 4 years at $1,090, and currently sell at a price of $1,155. What is their yield to call (YTC)? Choose one answer. a. 13.00% b. 10.88% c. 8.36% d. 11.10% e. 10.08% Marks: 4 Frederickson Office Supplies recently reported $534 of sales, $262 of operating costs other than depreciation, and $227 of depreciation. The company had no amortization charges and no non-operating income. It had $85 of interest payments, and its federal-plus-state income tax rate was 31%. The firm's NOPAT is $____________? (Keep two decimals) Answer: Quality Moving has $350 million of common equity on its balance sheet. Its stock price is $75 per share, and its Market Value Added (MVA) is $120 million. How many common shares are currently outstanding? Choose one answer. a. 6,266,667 b. 3,066,667 c. 351,600,000 d. 1,600,000 e. 124,666,667 An investment will pay $700 at the end of each of the next 5 years, $800 at the end of Year 6, and $1,100 at the end of Year 7. What is its present value if other investments of equal risk earn 9 percent annually? Choose one answer. a. $1,422.29 b. $3,801.51 c. $1,533.70 d. $2,953.98 e. $4,954.13 Suppose you invest $3,900 today in an account that earns a nominal annual rate (inom) of 16 percent, with interest compounded quarterly. How much money will you have after 10 years? Choose one answer. a. $45,240.00 b. $18,723.98 c. $1,477,012.52 d. $17,204.60 e. $5,772.95 What is the present value of an ordinary annuity that pays $900 per year for 5 years, assuming the annual discount rate is 8 percent? Choose one answer. a. $3,593.44 b. $3,062.62 c. $4,166.67 d. $612.52 e. $3,880.91 . Your client is 45 years old, and she wants to begin saving for retirement, with the first payment to come one year from now. She can save $3,000 per year, and you advise her to invest it in securities which you expect to provide an average annual return of 8 percent. If she follows your advice, how much money would she have at age 65? Choose one answer. a. $13,982.87 b. $148,268.76 c. $137,285.89 d. $64,800.00 e. $279,657.43 The price of a stock with an expected dividend next year of $2.1 and a constant growth rate of 5% is $18.8. The stocks expected total return for the coming year is _________%? (answer in two decimal numbers) Answer: What is the beta of a portfolio which invests 30% in stock A with a beta of 2.5, 12% in Treasury Bills and the rest in S&P500 index funds? (answer in two decimal numbers) Answer: Marks: 4 Hocking Manufacturing Company has a beta of 1. The required return on the stock market is 14.7%, and the risk-free rate is 4.7%. Hocking's required rates of return is _________%? (answer in two decimal numbers) Answer: A share of common stock has just paid a dividend of $1.5. If the expected long-run growth rate for this stock is 6%, and if investors' required rate of return is 14%, the stock price is $___________? (answer in two decimal numbers) Answer: The Nikko Company's last dividend was $1.50. The dividend growth rate is expected to be constant at 15% for 3 years, after which dividends are expected to grow at a rate of 6% forever. If Nikko's required return (rs) is 11%, what is the company's current stock price? Choose one answer. a. $38.99 b. $36.69 c. $41.40 d. $40.20 e. $37.82 A constant growth stock just paid a dividend of $1.8 and has a growth rate of 5.2%. The required rate of return on the stock is 14.8%. The stock's dividend yield in the current year is _______%. (answer in two decimal numbers) Answer: Rick Kish has a $1000 stock portfolio. $421 is invested in a stock with an expected return of 5.6% and the remainder is invested in a stock with an expected return of 16.9%. These are the only two investments in his portfolio. His portfolios expected return is _________%? (answer in two decimals) Answer: What is the present value of an ordinary annuity that pays $4,700 per year for 10 years, assuming the annual discount rate is 11 percent? Choose one answer. a. $30,724.12 b. $1,655.27 c. $16,552.67 d. $42,342.34 e. $27,679.39 TSW Inc. had the following data for last year: EBIT= $104 and Total operating capital = $186. Information for the just-completed year is as follows: EBIT= $151 and Total operating capital = $316. The corporate tax rate of the firm is 36%. The free cash flow the firm generate during the just-completed year is $________? (answer in two decimal numbers) Answer: Bill plans to retire in 27 years. He currently has saved up $300,000, and he believes he will need $1,000,000 at retirement. What annual interest rate must Bill earn to reach his goal, assuming he does not save any additional funds between now and retirement? Choose one answer. a. 8.64% b. 4.56% c. 1.11% d. 2.59% e. 30.00%