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Loiselle Graphics recently announced a 3-for-1 stock split. Prior to the split, the company's stock was trading at $90 per share. The split had no effect on the wealth of the company's investors. What will be the new stock price?

$ 30

Albany Motors recently completed a 3-for-1 stock split. Prior to the split, the company had 10 million shares outstanding and its stock price was $150 per share. After the split, the total market value of the company's stock equaled $1.5 billion. What was the price of the company's stock following the stock split?

$ 50

What is the price of a bond with a par value of $1,000.00, a coupon rate of 9.25%, and a yield to maturity of 6.70%? The bond has 16 years to maturity.

$1,245

What is the price of a perpetual bond with a par value of $1,000.00 and a coupon rate of 9.00% (semiannual coupon)? The bond has a nominal yield to maturity of 6.40%.

$1,406

Your broker has recommended that you purchase stock in National Bank & Trust, Inc. National Bank & Trust recently paid its annual dividend ($8.00). The firm also boasts an ROE of 15%, of which 50% is paid as dividends. Based on your analysis, you estimate that the stock has a required rate of 15.00%. What is the intrinsic value of this stock?

$114.67

A new transmission in your truck will cost $9,500.00. Luckily, it should reduce maintenance expense by $3,975.00 each year for the next 10 years. What is the NPV of the transmission? Use a discount rate of 10.70%.

$14,207

Your broker has recommended that you purchase stock in National Bank & Trust, Inc. National Bank & Trust recently paid its annual dividend ($16.00). Dividends have consistently grown at a rate of 3.50%. Analysts estimate that the stock has a beta of 1.41. The current risk-free rate is 2.60% and the market risk premium (RM - RF) is 8.50%. Assuming that CAPM holds, what is the intrinsic value of this stock?

$149.39

Sunny's BBQ Company recently issued $50.00 par-value preferred stock that pays an annual dividend of $16.00. Analysts estimate that the stock has a beta of 0.96. The current risk-free rate is 2.00% and the market risk premium (RM - RF) is 8.50%. Assuming that CAPM holds, what is the intrinsic value of this preferred stock?

$157.48

Your firm is selling a 3-year old machine that has a 5-year class life. The machine originally cost $580,000 and required no investment in net working capital at the time of installation. Your firm is selling the asset for $180,000. Your firm's marginal tax rate is 34%. What is the cash flow effect from selling this machine?

$197,680

What is the required monthly payment on a $350,000.00 mortgage. Assume a standard mortgage (360 months) with monthly payments. Use a nominal rate (monthly compounding) of 6.90%.

$2,305

You just won the lottery, which promises you $260,000.00 per year for the next 20 years, starting today. That is, this is an annuity due. If your discount rate is 7.00%, what is the "present value" of your winnings?

$2,947,254

Your firm is selling a 3-year old machine that has a 5-year class life. The machine originally cost $580,000 and required an investment in net working capital of $10,000 at the time of installation, recoverable when the machine is terminated. Your firm is selling the asset for $180,000. Your firm's marginal tax rate is 34%. What is the cash flow effect from selling this machine?

$207,680

You are interested in saving money for your first house. Your plan is to make regular deposits into an account that will earn 10.20% per year. Your first deposit of $3,500.00 will be made today. You also plan to make additional deposits at the end each of the next 7 years of $2,000.00. How much money will be in your account (what is the future value) just after making your final deposit?

$25,999

What is the remaining balance on a $300,000.00 mortgage after 65 months? The mortgage is a standard mortgage (360 months) with monthly payments and a nominal rate (monthly compounding) of 5.90%.

$276,752

What is the required monthly payment on a $530,000.00 mortgage. Assume a standard mortgage (360 months) with monthly payments. Use a nominal rate (monthly compounding) of 6.00%.

$3,177

Your broker has recommended that you purchase stock in National Bank & Trust, Inc. National Bank & Trust recently paid its annual dividend ($5.00). Dividends have consistently grown at a rate of 3.10%. Based on your analysis, you estimate that the stock has a required rate of 19.50%. What is the intrinsic value of this stock?

$31.43

Pelican Cove Corporation is trying to decide whether to invest in equipment to manufacture a new product. If the investment project is accepted, sales revenue will increase by $65,000 per year and materials costs will increase by $18,000 per year. The equipment will cost $140,000 and is depreciable over 10 years using simplified straight line. The firm has a marginal tax rate of 34%. Calculate the firm's annual cash flows resulting from the new project.

$35,780

This information will be used for two questions! Sand Key Development Company has a capital structure consisting of $20 million of 10% debt and $30 million of common equity. The firm has 500,000 shares of common stock outstanding. Sand Key is planning a major expansion and will need to raise $15 million. The firm must decide whether to finance the expansion with debt or equity. If equity financing is selected, common stock will be sold at $75 per share. If debt financing is chosen, 5% coupon bonds will be sold. The firm's marginal tax rate is 34%. Determine the level of operating income at which Sand Key would be indifferent between debt financing and equity financing.

$4,625,000

Your broker has recommended that you purchase stock in National Bank & Trust, Inc. National Bank & Trust recently paid its annual dividend ($16.00). The firm also boasts an ROE of 15%, of which 50% is paid as dividends. Analysts estimate that the stock has a beta of 1.20. The current risk-free rate is 2.10% and the market return (RM) is 10.00%. Assuming that CAPM holds, what is the intrinsic value of this stock?

$421.57

This information will be used for two questions! Sand Key Development Company has a capital structure consisting of $20 million of 10% debt and $30 million of common equity. The firm has 500,000 shares of common stock outstanding. Sand Key is planning a major expansion and will need to raise $15 million. The firm must decide whether to finance the expansion with debt or equity. If equity financing is selected, common stock will be sold at $75 per share. If debt financing is chosen, 6% coupon bonds will be sold. The firm's marginal tax rate is 34%. Determine the level of operating income at which Sand Key would be indifferent between debt financing and equity financing.

$5,150,000

This information will be used for two questions! Sand Key Development Company has a capital structure consisting of $20 million of 10% debt and $30 million of common equity. The firm has 500,000 shares of common stock outstanding. Sand Key is planning a major expansion and will need to raise $15 million. The firm must decide whether to finance the expansion with debt or equity. If equity financing is selected, common stock will be sold at $75 per share. If debt financing is chosen, 7% coupon bonds will be sold. The firm's marginal tax rate is 34%. Determine the level of operating income at which Sand Key would be indifferent between debt financing and equity financing.

$5,675,000

Pelican Cove Corporation is trying to decide whether to invest in equipment to manufacture a new product. If the investment project is accepted, sales revenue will increase by $65,000 per year and materials costs will decrease by $18,000 per year. The equipment will cost $140,000 and is depreciable over 10 years using simplified straight line. The firm has a marginal tax rate of 34%. Calculate the firm's annual cash flows resulting from the new project.

$59,540

This information will be used for two questions! Sand Key Development Company has a capital structure consisting of $20 million of 10% debt and $30 million of common equity. The firm has 500,000 shares of common stock outstanding. Sand Key is planning a major expansion and will need to raise $15 million. The firm must decide whether to finance the expansion with debt or equity. If equity financing is selected, common stock will be sold at $75 per share. If debt financing is chosen, 8% coupon bonds will be sold. The firm's marginal tax rate is 34%. Determine the level of operating income at which Sand Key would be indifferent between debt financing and equity financing.

$6,200,000

This information will be used for two questions! Sand Key Development Company has a capital structure consisting of $20 million of 10% debt and $30 million of common equity. The firm has 500,000 shares of common stock outstanding. Sand Key is planning a major expansion and will need to raise $15 million. The firm must decide whether to finance the expansion with debt or equity. If equity financing is selected, common stock will be sold at $75 per share. If debt financing is chosen, 9% coupon bonds will be sold. The firm's marginal tax rate is 34%. Determine the level of operating income at which Sand Key would be indifferent between debt financing and equity financing.

$6,725,000

Your broker has recommended that you purchase stock in ZZZ-Best, Inc. She estimates that the 1-year target price is $70.00, and ZZZ-Best consistently pays an annual dividend of $8.00. Based on your analysis, you estimate that the stock has a required rate of 18.00%. What is the intrinsic value of this stock?

$66.10

You want to save $98,000.00 to buy an boat by making an equal, end of year payment into a brokerage account over the next 9 years. If you expect to earn an annual effective interest rate of 7.75% on your account, how much do you need to deposit each year into your account?

$7,930

Sonny's BBQ Company recently issued $85.00 par-value preferred stock that pays an annual dividend of $9.00. Analysts estimate that the stock has a beta of 1.01. The current T-bill rate is 2.40%. The S&P 500's expected return (RM) is 12.10%. Assuming that CAPM holds, what is the intrinsic value of this preferred stock?

$73.79

Your broker has recommended that you purchase stock in National Bank & Trust, Inc. National Bank & Trust recently paid its annual dividend ($8.00). Dividends have consistently grown at a rate of 3.80%. Analysts estimate that the stock has a beta of 1.19. The current risk-free rate is 2.30% and the market return (RM) is 11.50%. Assuming that CAPM holds, what is the intrinsic value of this stock?

$87.89

Delta Rockets recently issued $80.00 par-value preferred stock that pays an annual dividend of $16.00. Based on your research, you estimate that the stock has a required rate of 17.50%. What is the intrinsic value of this preferred stock?

$91.43

You decide to form a portfolio with the following amounts invested in the following stocks. What is the expected return of the portfolio? Stock Amount Beta Expected Return IBM $4,800 0.90 13.5% Microsoft $1,200 1.10 14.5% Dell $3,000 1.25 15.8% Verisign $3,000 1.60 18.1%

0.1533

You decide to form a portfolio with the following amounts invested in the following stocks. What is the beta of the portfolio? Stock Amount Beta Expected Return Bank of America $7,800 0.90 13.5% General Motores $1,200 1.10 14.5% JCPenney $3,000 1.25 15.8% Seagate $3,000 1.60 18.1%

1.126

You decide to form a portfolio with the following amounts invested in the following stocks. What is the beta of the portfolio? Stock Amount Beta Expected Return Bank of America $4,800 0.90 13.5% General Motores $1,200 1.10 14.5% JCPenney $3,000 1.25 15.8% Seagate $3,000 1.60 18.1%

1.1825

Conor Airlines Inc. recently issued $75.00 par-value preferred stock that pays a 8.25% dividend rate per year. If the stock is currently selling for $60.00, what is the expected return of this preferred stock?

10.31%

A firm has a required return of 14.2% and a beta of 1.63. If the risk-free rate is currently 5.4%, what is the expected return to the market? Assume that CAPM is correct.

10.80%

Last year, Cayman Corporation had sales of $7,000,000, total variable costs of $3,000,000, and total fixed costs of $1,500,000. In addition, they paid $480,000 in interest to bondholders. Cayman has a 35% marginal tax rate. If Cayman's sales increase 7%, what should be the increase in operating income?

11.2%

A firm has a required return of 14.2% and a beta of 1.36. If the risk-free rate is currently 5.4%, what is the expected return to the market? Assume that CAPM is correct.

11.87%

A bond with a par value of $1,000.00 and a coupon rate of 7.25% has a current yield of 9.50%. What is its yield to maturity? The bond has 8 years to maturity.

12.02%

Your firm recently paid a dividend of $4 to common stockholders. Dividends are expected to grow at 8% per year for the foreseeable future. The current stock price is $54. New shares could be sold for the same price, but flotation costs would amount to $6 per share. A $15 million bank line of credit is available with an interest rate of 9 percent. The firm's tax rate is 34%. What is the firm's cost of capital if their capital structure consists of 60% (external) equity and 40% bank loans?

12.58%

Last year, Cayman Corporation had sales of $7,000,000, total variable costs of $3,000,000, and total fixed costs of $1,500,000. In addition, they paid $480,000 in interest to bondholders. Cayman has a 35% marginal tax rate. If Cayman's sales increase 7%, what should be the increase in earnings per share?

13.9%

Consider a standard mortgage (360 months) with monthly payments and a nominal rate (monthly compounding) of 6.80%. What portion of the payments during the first 31 months goes toward principal?

14.25%

Consider a standard mortgage (360 months) with monthly payments and a nominal rate (monthly compounding) of 6.70%. What portion of the payments during the first 29 months goes toward principal?

14.58%

Your firm recently paid a dividend of $4 to common stockholders. Dividends are expected to grow at 8% per year for the foreseeable future. The current stock price is $54. Preferred stock would pay a 12% dividend on a $50 par value. The stocks would sell for par value less flotation costs of $2 per share. Wellington has a marginal tax rate of 34 percent. What is the firm's cost of capital if their capital structure consists of 60% equity and 40% preferred stock?

14.60%

Suppose you own 5% of Coastal Corporation's 200,000 outstanding common shares. The stock was trading for $135 per share before Coastal executives announced a 3-for-2 stock split. After the split, you will own _____ shares worth _____ per share.

15,000; $90

A new security system has a price-tag of $8,000.00, but should save your company $3,600.00 each year for the next 10 years in reduced thefts. What is the profitability index of the security system? Use a discount rate of 10.70%

2.68

A new security system has a price-tag of $8,000.00, but should save your company $3,600.00 each year for the next 10 years in reduced thefts. What is the profitability index of the security system? Use a discount rate of 10.70%.

2.68

Given the following cash flows for two mutually exclusive projects, and a required rate of return of 12%, what is the EAA for Project A? Year Project A Project B 0 -300,000 -300,000 1 150,000 70,000 2 150,000 70,000 3 80,000 120,000 4 80,000 120,000 5 120,000 6 60,000

20,179

Last year, Cayman Corporation had sales of $30,000,000, total variable costs of $13,500,000, and total fixed costs of $5,000,000. In addition, they paid $3,000,000 in interest to bondholders. Cayman has a marginal tax rate of 35 percent. If Cayman's sales increase by 15%, what should be the increase in operating income?

21.5%

Suppose you own 5% of Coastal Corporation's 300,000 outstanding common shares. The stock was trading for $165 per share before Coastal executives announced a 3-for-2 stock split. After the split, you will own _____ shares worth _____ per share.

22,500; $110

Suppose you own 5% of Coastal Corporation's 300,000 outstanding common shares. The stock was trading for $135 per share before Coastal executives announced a 3-for-2 stock split. After the split, you will own _____ shares worth _____ per share.

22,500; $90

ZZZ-Best, Inc. recently issued $65.00 par-value preferred stock that pays an annual dividend of $17.00. If the stock is currently selling for $76.00, what is the expected return of this preferred stock?

22.37%

Last year, Cayman Corporation had sales of $30,000,000, total variable costs of $13,500,000, and total fixed costs of $5,000,000. In addition, they paid $3,000,000 in interest to bondholders. Cayman has a marginal tax rate of 35 percent. If Cayman's sales increase by 15%, what should be the increase in earnings per share?

29.1%

By purchasing training software for $5,500.00, you can eliminate other training costs of $3,425.00 each year for the next 10 years. What is the profitability index of the software? Use a discount rate of 10.60%.

3.73

Suppose you own 5% of Coastal Corporation's 400,000 outstanding common shares. The stock was trading for $165 per share before Coastal executives announced a 3-for-2 stock split. After the split, you will own _____ shares worth _____ per share.

30,000; $110

A new security system has a price-tag of $8,000.00, but should save your company $3,000.00 each year for the next 10 years in reduced thefts. What is the IRR of the security system?

35.73%

By purchasing training software for $7,000.00, you can eliminate other training costs of $3,400.00 each year for the next 10 years. What is the IRR of the software?

47.58%

A bond with a par value of $1,000.00 and an annual coupon has a yield to maturity of 5.70% and a current price of $960.00. If the bond has 6 years to maturity, what is its current yield?

5.10%

A bond with a par value of $1,000.00 and an annual coupon has a yield to maturity of 5.70% and a current price of $970.00. If the bond has 11 years to maturity, what is its current yield?

5.49%

A perpetual bond with a par value of $1,000.00 and a coupon rate of 7.50% (semiannual coupon) has a nominal yield to maturity of 5.50%. What is its current yield?

5.50%

Stock in Simons Industries is currently selling for $79.00. It just paid its annual dividend of $2.00, which have consistently grown at a rate of 2.90%. What is the expected return of this stock?

5.51%

A bond with a par value of $1,000.00 and a coupon rate of 7.50% (semiannual coupon) has a nominal yield to maturity of 5.20%. If the bond has 14 years to maturity, what is its current yield?

6.11%

A new transmission in your truck will cost $5,500.00. Luckily, it should recude maintenance expense by $3,650.00 each year for the next 10 years. What is the IRR of the transmission?

65.94%

A bond with a par value of $1,000.00 and an annual coupon rate of 9.50% has a yield to maturity of 6.40%. If the bond has 11 years to maturity, what is its current yield?

7.66%

What is the effective annual rate (EAR) for a continuously compounded annual nominal rate of 7.50%?

7.7884%

A bond with a par value of $1,000.00 and a coupon rate of 8.25% (semiannual coupon) has a current market value of $995.00. What is its nominal yield to maturity? The bond has 5 years to maturity.

8.37%

A perpetual bond with a par value of $1,000.00 and a coupon rate of 7.75% has a current market value of $900.00. What is its yield to maturity?

8.61%

Stock in Simons Industries is currently selling for $91.00. It just paid its annual dividend of $1.00 after reporting an ROE of 15%, of which 50% is paid as dividends. What is the expected return of this stock?

8.68%

Last year, Cayman Corporation had sales of $7,000,000, total variable costs of $3,000,000, and total fixed costs of $1,500,000. In addition, they paid $480,000 in interest to bondholders. Cayman has a 35% marginal tax rate. If Cayman's operating income increases 7%, what should be the increase in earnings per share?

8.7%

A perpetual bond with a par value of $1,000.00 and a coupon rate of 8.25% (semiannual coupon) has a current market value of $935.00. What is its nominal yield to maturity?

8.82%

A zero-coupon bond with a par value of $1,000.00 has a current market value of $548.00. If the bond has 7 years to maturtiy, what is its yield to maturity?

8.97%

Consider a standard mortgage (360 months) with monthly payments and a nominal rate (monthly compounding) of 5.70%. What portion of the payments during the first 30 months goes toward interest?

80.53%

A bond with a par value of $1,000.00 and an annual coupon has a yield to maturity of 5.60% and a current price of $975.00. If the bond has 18 years to maturity, what is its current yield?

A bond with a par value of $1,000.00 and an annual coupon has a yield to maturity of 5.60% and a current price of $975.00. If the bond has 18 years to maturity, what is its current yield?

Currently in the market, the risk-free rate is 6% and the market risk premium [E(RM) - RF] is 5%. Based on this information, which of the following statements is most correct? Assume that CAPM is correct.

A portfolio with a beta=1.0 has a required return of 11%.

Given the following cash flows for two mutually exclusive projects, and a required rate of return of 12%, which of the following statements is correct? Year Project A Project B 0 -96,000 -32,000 1 40,000 15,000 2 40,000 15,000 3 40,000 15,000 4 40,000 15,000

Because of size disparity, IRR indicates that Project B is better, but NPV indicates that Project A is better.

Given the following cash flows for two mutually exclusive projects, and a required rate of return of 12%, which of the following statements is true? Year Project A Project B 0 -580,000 -580,000 1 290,000 130,000 2 290,000 130,000 3 150,000 230,000 4 150,000 230,000 5 230,000 6 115,000

Project A should be accepted because it has the highest EAA.

This question is based on the other Sand Key Development Company question! Sand Key Development Company estimates that it will generate an EBIT of $7.25 million. Which financing option should Sand Key use?

The "debt financing" option.

This question is based on the other Sand Key Development Company question! Sand Key Development Company estimates that it will generate an EBIT of $3.25 million. Which financing option should Sand Key use?

The "equity financing" option.

Given the following cash flows for two independent projects, and a required rate of return of 12%, which of the following statements is correct? Year Project A Project B 0 -96,000 -93,000 1 2,400 73,000 2 4,800 48,000 3 78,000 4,800 4 84,000 4,800

Time/size disparity is not a concern in this scenario. Both projects should be accepted.