Finance Midterm
The 2014 balance sheet of Steelo, Inc., showed current assets of $4,515 and current liabilities of $3,005. The 2015 balance sheet showed current assets of $2,990 and current liabilities of $1,590. What was the company's 2015 change in net working capital, or NWC?
$-110
The 2014 balance sheet of Sugarpova's Tennis Shop, Inc., showed long-term debt of $5.4 million, and the 2015 balance sheet showed long-term debt of $5.8 million. The 2015 income statement showed an interest expense of $130,000. What was the firm's cash flow to creditors during 2015?
$-270,000
Quarles Industries had the following operating results for 2015: sales = $30,180; cost of goods sold = $19,860; depreciation expense = $5,340; interest expense = $2,790; dividends paid = $1,550. At the beginning of the year, net fixed assets were $17,210, current assets were $5,880, and current liabilities were $3,375. At the end of the year, net fixed assets were $20,760, current assets were $7,600, and current liabilities were $4,000. The tax rate for 2015 was 30 percent. If no new debt was issued during the year, what is the cash flow to stockholders?
$-3,112
Quarles Industries had the following operating results for 2015: sales = $30,180; cost of goods sold = $19,860; depreciation expense = $5,340; interest expense = $2,790; dividends paid = $1,550. At the beginning of the year, net fixed assets were $17,210, current assets were $5,880, and current liabilities were $3,375. At the end of the year, net fixed assets were $20,760, current assets were $7,600, and current liabilities were $4,000. The tax rate for 2015 was 30 percent. What is the cash flow from assets for 2015?
$-322
Sqeekers Co. issued 13-year bonds a year ago at a coupon rate of 7.9 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 6.2 percent, what is the current bond price?
$1,142.41
Volbeat Corp. shows the following information on its 2015 income statement: sales = $264,000; costs = $170,000; other expenses = $7,900; depreciation expense = $14,500; interest expense = $13,300; taxes = $20,405; dividends = $10,000. In addition, you're told that the firm issued $4,800 in new equity during 2015 and redeemed $3,300 in outstanding long-term debt. If net fixed assets increased by $28,000 during the year, what was the addition to NWC?
$1,395
The 2014 balance sheet of Sugarpova's Tennis Shop, Inc., showed long-term debt of $5.8 million, and the 2015 balance sheet showed long-term debt of $6 million. The 2015 income statement showed an interest expense of $195,000. During 2015, the company had a cash flow to creditors of -$5,000 and the cash flow to stockholders for the year was $75,000. Suppose you also know that the firm's net capital spending for 2015 was $1,430,000, and that the firm reduced its net working capital investment by $81,000. What was the firm's 2015 operating cash flow, or OCF?
$1,419,000
Quarles Industries had the following operating results for 2015: sales = $30,180; cost of goods sold = $19,860; depreciation expense = $5,340; interest expense = $2,790; dividends paid = $1,550. At the beginning of the year, net fixed assets were $17,210, current assets were $5,880, and current liabilities were $3,375. At the end of the year, net fixed assets were $20,760, current assets were $7,600, and current liabilities were $4,000. The tax rate for 2015 was 30 percent. What is net income for 2015?
$1,533
KCCO, Inc., has current assets of $7,000, net fixed assets of $25,900, current liabilities of $5,450, and long-term debt of $13,000. How much is net working capital?
$1,550
Shelton, Inc., has sales of $21 million, total assets of $19.1 million, and total debt of $6.8 million. Assume the profit margin is 8 percent. What is the company's net income?
$1,680,000
Makers Corp. had additions to retained earnings for the year just ended of $192,000. The firm paid out $182,000 in cash dividends, and it has ending total equity of $4.87 million. The company currently has 100,000 shares of common stock outstanding. What are dividends per share?
$1.82 per share
Yan Yan Corp. has a $10,000 par value bond outstanding with a coupon rate of 4.8 percent paid semiannually and 22 years to maturity. The yield to maturity on this bond is 4.2 percent. What is the price of the bond?
$10,856.08
You have just made your first $4,000 contribution to your retirement account. Assume you earn a return of 14 percent per year and make no additional contributions. What will your account be worth when you retire in 25 years?
$105,847.66
Suppose you are going to receive $14,200 per year for six years. The appropriate interest rate is 9.3 percent. Suppose you plan to invest the payments for six years. What is the future value if the payments are an ordinary annuity?
$107,643.12
TwitterMe, Inc., is a new company and currently has negative earnings. The company's sales are $2.7 million and there are 144,000 shares outstanding. What if the price-sales ratio were 5.7?
$107.81
An investment offers $5,700 per year for 10 years, with the first payment occurring one year from now. If the required return is 5 percent, what would the value be if the payments occurred for 65 years?
$109,218.10
An investment offers $5,700 per year for 10 years, with the first payment occurring one year from now. If the required return is 5 percent, what would the value be if the payments occurred forever?
$114,000.00
Suppose you are going to receive $14,200 per year for six years. The appropriate interest rate is 9.3 percent. Suppose you plan to invest the payments for six years. What is the future value if the payments are an annuity due?
$117,653.93
In 1895, the first Putting Green Championship was held. The winner's prize money was $200. In 2014, the winner's check was $1,480,000. If the winner's prize increases at the same rate, what will it be in 2043?
$12,977,281.67
TwitterMe, Inc., is a new company and currently has negative earnings. The company's sales are $2.7 million and there are 144,000 shares outstanding. If the benchmark price-sales ratio is 6.4, what is your estimate of an appropriate stock price?
$120
KCCO, Inc., has current assets of $7,000, net fixed assets of $25,900, current liabilities of $5,450, and long-term debt of $13,000. What is the value of the shareholders' equity account for this firm?
$14,450
Billy's Exterminators, Inc., has sales of $592,000, costs of $284,000, depreciation expense of $36,000, interest expense of $28,000, and a tax rate of 35 percent. What is the net income for this firm?
$158,600
Y3K, Inc., has sales of $6,299, total assets of $2,915, and a debt-equity ratio of 1.20. If its return on equity is 12 percent, what is its net income?
$159
Volbeat Corp. shows the following information on its 2015 income statement: sales = $264,000; costs = $170,000; other expenses = $7,900; depreciation expense = $14,500; interest expense = $13,300; taxes = $20,405; dividends = $10,000. In addition, you're told that the firm issued $4,800 in new equity during 2015 and redeemed $3,300 in outstanding long-term debt. What is the 2015 cash flow to creditors?
$16,600
Dinero Bank offers you a five-year loan for $68,000 at an annual interest rate of 8.25 percent. What will your annual loan payment be?
$17,143.41
Ridiculousness, Inc., has sales of $47,500, costs of $20,500, depreciation expense of $1,800, and interest expense of $1,300. If the tax rate is 35 percent, what is the operating cash flow, or OCF?
$18,635
W&B Corp. has current liabilities of $450,000, a quick ratio of .87, inventory turnover of 6.3, and a current ratio of 1.6. What is the cost of goods sold for the company?
$2,069,550
If you deposit $4,800 at the end of each of the next 20 years into an account paying 10.8 percent interest, how much will you have if you make deposits for 40 years?
$2,643,423.31
Year Cash Flow 1 $ 810 2 1,110 3 1,370 4 1,500 What is the present value at 25 percent?
$2,674.24
You find a zero coupon bond with a par value of $10,000 and 26 years to maturity. The yield to maturity on this bond is 4.8 percent. Assume semiannual compounding periods. What is the price of the bond?
$2,913.41
Suppose you know that a company's stock currently sells for $50 per share and the required return on the stock is 10 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. If it's the company's policy to always maintain a constant growth rate in its dividends, what is the current dividend per share?
$2.38
The Perfect Rose Co. has earnings of $1.95 per share. The benchmark PE for the company is 12. What stock price would you consider appropriate?
$23.40
The Jackson-Timberlake Wardrobe Co. just paid a dividend of $2.10 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year indefinitely. Investors require a return of 14 percent on the company's stock. What is the current stock price?
$24.56
Quarles Industries had the following operating results for 2015: sales = $30,180; cost of goods sold = $19,860; depreciation expense = $5,340; interest expense = $2,790; dividends paid = $1,550. At the beginning of the year, net fixed assets were $17,210, current assets were $5,880, and current liabilities were $3,375. At the end of the year, net fixed assets were $20,760, current assets were $7,600, and current liabilities were $4,000. The tax rate for 2015 was 30 percent. If no new debt was issued during the year, what is the cash flow to creditors?
$2790
You have just made your first $4,000 contribution to your retirement account. Assume you earn a return of 14 percent per year and make no additional contributions. What if you wait 10 years before contributing?
$28,551.75
The Jackson-Timberlake Wardrobe Co. just paid a dividend of $2.10 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year indefinitely. Investors require a return of 14 percent on the company's stock. What will the stock price be in three years?
$28.36
The Perfect Rose Co. has earnings of $1.95 per share. The benchmark PE for the company is 12. What if the benchmark PE were 15?
$29.25
Year Cash Flow 1 $ 810 2 1,110 3 1,370 4 1,500 What is the present value at 17 percent?
$3,159.04
Year Cash Flow 1 $ 810 2 1,110 3 1,370 4 1,500 If the discount rate is 11 percent, what is the present value of these cash flows?
$3,620.46
You want to have $79,000 in your savings account 13 years from now, and you're prepared to make equal annual deposits into the account at the end of each year. If the account pays 7.30 percent interest, what amount must you deposit each year?
$3,846.79
Makers Corp. had additions to retained earnings for the year just ended of $192,000. The firm paid out $182,000 in cash dividends, and it has ending total equity of $4.87 million. The company currently has 100,000 shares of common stock outstanding. What are earnings per share?
$3.74 per share
If you deposit $4,800 at the end of each of the next 20 years into an account paying 10.8 percent interest, how much money will you have in the account in 20 years?
$301,186.56
Estes Park Corp. pays a constant $7.40 dividend on its stock. The company will maintain this dividend for the next 8 years and will then cease paying dividends forever. If the required return on this stock is 12 percent, what is the current share price?
$36.76
Your company will generate $73,000 in annual revenue each year for the next seven years from a new information database. If the appropriate interest rate is 8.25 percent, what is the present value of the savings?
$376,836.95
The Jackson-Timberlake Wardrobe Co. just paid a dividend of $2.10 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year indefinitely. Investors require a return of 14 percent on the company's stock.
$38.01
E-Eyes.com just issued some new preferred stock. The issue will pay an annual dividend of $25 in perpetuity, beginning 14 years from now. If the market requires a return of 3.9 percent on this investment, how much does a share of preferred stock cost today?
$389.83
An investment offers $5,700 per year for 10 years, with the first payment occurring one year from now. If the required return is 5 percent, what is the value of the investment?
$44,013.89
Caan Corporation will pay a $2.62 per share dividend next year. The company pledges to increase its dividend by 4.5 percent per year indefinitely. If you require a return of 10 percent on your investment, how much will you pay for the company's stock today?
$47.64
Antiques R Us is a mature manufacturing firm. The company just paid a dividend of $8.15, but management expects to reduce the payout by 5 percent per year indefinitely. If you require a return of 11 percent on this stock, what will you pay for a share today?
$48.39
Makers Corp. had additions to retained earnings for the year just ended of $192,000. The firm paid out $182,000 in cash dividends, and it has ending total equity of $4.87 million. The company currently has 100,000 shares of common stock outstanding. What is the book value per share?
$48.70
Your coin collection contains 52 1952 silver dollars. If your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retire in 2062, assuming they appreciate at an annual rate of 4.3 percent?
$5,336.76
Union Local School District has bonds outstanding with a coupon rate of 3.2 percent paid semiannually and 23 years to maturity. The yield to maturity on these bonds is 2.6 percent and the bonds have a par value of $5,000. What is the price of the bonds?
$5,516.88
If you put up $53,000 today in exchange for a 6.75 percent, 14-year annuity, what will the annual cash flow be?
$5,969.74
Volbeat Corp. shows the following information on its 2015 income statement: sales = $264,000; costs = $170,000; other expenses = $7,900; depreciation expense = $14,500; interest expense = $13,300; taxes = $20,405; dividends = $10,000. In addition, you're told that the firm issued $4,800 in new equity during 2015 and redeemed $3,300 in outstanding long-term debt. What is the 2015 cash flow to stockholders?
$5200
You are scheduled to receive $22,500 in three years. When you receive it, you will invest it for nine more years at 10 percent per year. How much will you have in twelve years?
$53,053.82
Maloney, Inc., has an odd dividend policy. The company has just paid a dividend of $4 per share and has announced that it will increase the dividend by $4 per share for each of the next five years, and then never pay another dividend. If you require a return of 10 percent on the company's stock, how much will you pay for a share today?
$57.77
You have just received notification that you have won the $2 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you're around to collect), 67 years from now. What is the present value of your windfall if the appropriate discount rate is 9 percent?
$6,215.19
Cannonier, Inc., has identified an investment project with the following cash flows. Year Cash Flow 1 $970 2 1,200 3 1,420 4 2,160 If the discount rate is 7 percent, what is the future value of these cash flows in Year 4?
$6,241.57
Cannonier, Inc., has identified an investment project with the following cash flows. Year Cash Flow 1 $970 2 1,200 3 1,420 4 2,160 What is the future value at a discount rate of 13 percent?
$6,696.49
Suppose you are going to receive $14,200 per year for six years. The appropriate interest rate is 9.3 percent. What is the present value of the payments if they are in the form of an ordinary annuity?
$63,134.29
Volbeat Corp. shows the following information on its 2015 income statement: sales = $264,000; costs = $170,000; other expenses = $7,900; depreciation expense = $14,500; interest expense = $13,300; taxes = $20,405; dividends = $10,000. In addition, you're told that the firm issued $4,800 in new equity during 2015 and redeemed $3,300 in outstanding long-term debt. What is the 2015 operating cash flow?
$65,695
Bayou Okra Farms just paid a dividend of $3.70 on its stock. The growth rate in dividends is expected to be a constant 7 percent per year indefinitely. Investors require a return of 16 percent for the first three years, a return of 14 percent for the next three years, and a return of 12 percent thereafter. What is the current share price?
$67.60
The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $39,000 per year forever. If the required return on this investment is 5.8 percent, how much will you pay for the policy?
$672,413.79
Suppose you are going to receive $14,200 per year for six years. The appropriate interest rate is 9.3 percent. What is the present value if the payments are an annuity due?
$69,005.78
Cannonier, Inc., has identified an investment project with the following cash flows. Year Cash Flow 1 $970 2 1,200 3 1,420 4 2,160 What is the future value at a discount rate of 22 percent?
$7,439.85
The 2014 balance sheet of Sugarpova's Tennis Shop, Inc., showed $570,000 in the common stock account and $2.4 million in the additional paid-in surplus account. The 2015 balance sheet showed $610,000 and $2.8 million in the same two accounts, respectively. If the company paid out $515,000 in cash dividends during 2015, what was the cash flow to stockholders for the year?
$75,000
SME Company has a debt-equity ratio of .80. Return on assets is 8.0 percent, and total equity is $532,000. What is the net income?
$76,608
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a $10 per share dividend 10 years from today and will increase the dividend by 6 percent per year thereafter. If the required return on this stock is 11 percent, what is the current share price?
$78.18
Suppose you are committed to owning a $191,000 Ferrari. If you believe your mutual fund can achieve a 11 percent annual rate of return and you want to buy the car in 8 years on the day you turn 30, how much must you invest today?
$82,879.96
Bowyer Driving School's 2014 balance sheet showed net fixed assets of $3.2 million, and the 2015 balance sheet showed net fixed assets of $3.8 million. The company's 2015 income statement showed a depreciation expense of $235,000. What was net capital spending for 2015?
$835,000
Quarles Industries had the following operating results for 2015: sales = $30,180; cost of goods sold = $19,860; depreciation expense = $5,340; interest expense = $2,790; dividends paid = $1,550. At the beginning of the year, net fixed assets were $17,210, current assets were $5,880, and current liabilities were $3,375. At the end of the year, net fixed assets were $20,760, current assets were $7,600, and current liabilities were $4,000. The tax rate for 2015 was 30 percent. What is the operating cash flow for 2015?
$9,663
Lohn Corporation is expected to pay the following dividends over the next four years: $18, $14, $13, and $8.50. Afterward, the company pledges to maintain a constant 4 percent growth rate in dividends forever. If the required return on the stock is 14 percent, what is the current share price?
$92.70
An investment offers $5,700 per year for 10 years, with the first payment occurring one year from now. If the required return is 5 percent, what would the value be if the payments occurred for 35 years?
$93,332.91
The Dyrdek Co. had $285,000 in 2014 taxable income. Use the tax rates from Table 2.3. Calculate the company's 2014 income taxes.
$94,400
Although appealing to more refined tastes, art as a collectible has not always performed so profitably. During 2003, an auction house sold a sculpture at auction for a price of $10,361,500. Unfortunately for the previous owner, he had purchased it in 2000 at a price of $12,477,500. What was his annual rate of return on this sculpture?
-6.01%
Levine, Inc., has a total debt ratio of .36. What is its debt-equity ratio?
.56
Zombie Corp. has a profit margin of 5.3 percent, total asset turnover of 2.4, and ROE of 19.84 percent. What is this firm's debt-equity ratio?
.56
SDJ, Inc., has net working capital of $3,810, current liabilities of $5,600, and inventory of $4,840. What is the quick ratio?
0.82 times
Makers Corp. had additions to retained earnings for the year just ended of $192,000. The firm paid out $182,000 in cash dividends, and it has ending total equity of $4.87 million. The company currently has 100,000 shares of common stock outstanding. If the stock currently sells for $65 per share, what is the market-to-book ratio?
1.33 times
Levine, Inc., has a total debt ratio of .36. What is its equity multiplier?
1.56
SDJ, Inc., has net working capital of $3,810, current liabilities of $5,600, and inventory of $4,840. What is the current ratio?
1.68 times
SME Company has a debt-equity ratio of .80. Return on assets is 8.0 percent, and total equity is $532,000. What is the equity multiplier?
1.80
At 7.1 percent interest, how long does it take to double your money? At 7.1 percent interest, how long does it take to quadruple it?
10.11 years 20.21 years
At 7 percent interest, how long does it take to double your money? At 7 percent interest, how long does it take to quadruple it?
10.24 years 20.48 years
The next dividend payment by Halestorm, Inc., will be $1.44 per share. The dividends are anticipated to maintain a growth rate of 6 percent forever. If the stock currently sells for $26 per share, what is the required return?
11.54%
Aguilera Corp. has a current accounts receivable balance of $336,500. Credit sales for the year just ended were $4,515,830. What is the company's receivables turnover?
13.42 times
Shelton, Inc., has sales of $21 million, total assets of $19.1 million, and total debt of $6.8 million. Assume the profit margin is 8 percent. What is the company's ROE?
13.66%
If Roten Rooters, Inc., has an equity multiplier of 1.64, total asset turnover of 1.90, and a profit margin of 4.4 percent, what is its ROE?
13.70%
SME Company has a debt-equity ratio of .80. Return on assets is 8.0 percent, and total equity is $532,000. What is the return on equity?
14.40
Makers Corp. had additions to retained earnings for the year just ended of $192,000. The firm paid out $182,000 in cash dividends, and it has ending total equity of $4.87 million. The company currently has 100,000 shares of common stock outstanding. What is the price-earnings ratio?
17.38 times
Makers Corp. had additions to retained earnings for the year just ended of $192,000. The firm paid out $182,000 in cash dividends, and it has ending total equity of $4.87 million. The company currently has 100,000 shares of common stock outstanding. If the company had sales of $3.18 million, what is the price-sales ratio?
2.04 times
You expect to receive $35,000 at graduation in two years. You plan on investing it at 9 percent until you have $170,000. How long will you wait from now?
20.34 years
Calculate the cash ratio for each year.
2014- 0.10 times 2015- 0.12 times
Calculate the current ratio for each year.
2014- 1.41 times 2015-1.17 times
Calculate the quick ratio for each year.
2014-0.27 times 2015-0.26 times
Calculate the NWC to total assets ratio for each year.
2014-7.00 % 2015-3.60%
You're trying to save to buy a new $204,000 Ferrari. You have $54,000 today that can be invested at your bank. The bank pays 6.2 percent annual interest on its accounts. How long will it be before you have enough to buy the car?
22.1 years
Aguilera Corp. has a current accounts receivable balance of $336,500. Credit sales for the year just ended were $4,515,830. How long did it take on average for credit customers to pay off their accounts during the past year?
27.20 days
Aguilera Corp. has a current accounts receivable balance of $336,500. Credit sales for the year just ended were $4,515,830. What is the company's days' sales in receivables?
27.20 days
Treasury bills are currently paying 6 percent and the inflation rate is 2.8 percent. What is the exact real rate?
3.11%
Treasury bills are currently paying 6 percent and the inflation rate is 2.8 percent. What is the approximate real rate of interest?
3.20%
An investment offers a total return of 10 percent over the coming year. Janice Yellen thinks the total real return on this investment will be only 6 percent. What does Janice believe the inflation rate will be over the next year?
3.77%
The Dyrdek Co. had $273,000 in 2014 taxable income. Use the tax rates from Table 2.3. What is the average tax rate?
32.86%
The Dyrdek Co. had $273,000 in 2014 taxable income. Use the tax rates from Table 2.3. What is the marginal tax rate?
39%
The Green Corporation has ending inventory of $485,100, and cost of goods sold for the year just ended was $4,487,175. How long on average did a unit of inventory sit on the shelf before it was sold?
39.46 days
The Green Corporation has ending inventory of $485,100, and cost of goods sold for the year just ended was $4,487,175. What is the days' sales in inventory?
39.46 days
Moraine, Inc., has an issue of preferred stock outstanding that pays a $4.55 dividend every year in perpetuity. If this issue currently sells for $96 per share, what is the required return?
4.74%
Say you own an asset that had a total return last year of 11.2 percent. If the inflation rate last year was 5.9 percent, what was your real return?
5%
The next dividend payment by Halestorm, Inc., will be $1.92 per share. The dividends are anticipated to maintain a growth rate of 6 percent forever. The stock currently sells for $38 per share. What is the dividend yield?
5.05%
A coin that was featured in a famous novel sold at auction in 2014 for $3,987,500. The coin had a face value of $15 when it was issued in 1785 and had previously been sold for $290,000 in 1969. At what annual rate did the coin appreciate from its first minting to the 1969 sale?
5.51%
A coin that was featured in a famous novel sold at auction in 2014 for $3,987,500. The coin had a face value of $15 when it was issued in 1785 and had previously been sold for $290,000 in 1969. At what annual rate did the coin appreciate from its first minting to the 2014 sale?
5.61%
Essary Enterprises has bonds on the market making annual payments, with eleven years to maturity, a par value of $1,000, and selling for $958. At this price, the bonds yield 6.4 percent. What must the coupon rate be on the bonds?
5.86%
The next dividend payment by Halestorm, Inc., will be $1.92 per share. The dividends are anticipated to maintain a growth rate of 6 percent forever. The stock currently sells for $38 per share. What is the expected capital gains yield?
6%
A coin that was featured in a famous novel sold at auction in 2014 for $3,987,500. The coin had a face value of $15 when it was issued in 1785 and had previously been sold for $290,000 in 1969. What annual rate did the 1969 buyer earn on his purchase?
6.00%
A Japanese company has a bond outstanding that sells for 92 percent of its ¥100,000 par value. The bond has a coupon rate of 5.9 percent paid annually and matures in 15 years. What is the yield to maturity of this bond?
6.77%
Heginbotham Corp. issued 15-year bonds two years ago at a coupon rate of 7.6 percent. The bonds make semiannual payments. If these bonds currently sell for 106 percent of par value, what is the YTM?
6.89%
DMA Corporation has bonds on the market with 19.5 years to maturity, a YTM of 6.6 percent, and a current price of $1,043. The bonds make semiannual payments and have a par value of $1,000. What must the coupon rate be on these bonds?
7.00%
The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $35,000 per year forever. Suppose a sales associate told you the policy costs $480,000. At what interest rate would this be a fair deal?
7.29%
Suppose the real rate is 2.8 percent and the inflation rate is 4.4 percent. What rate would you expect to see on a Treasury bill?
7.32%
In 1895, the first Putting Green Championship was held. The winner's prize money was $200. In 2014, the winner's check was $1,480,000. What was the percentage increase per year in the winner's check over this period?
7.77%
Tell Me Why Co. is expected to maintain a constant 3 percent growth rate in its dividends indefinitely. If the company has a dividend yield of 4.8 percent, what is the required return on the company's stock?
7.8%
Assume the total cost of a college education will be $250,000 when your child enters college in 17 years. You presently have $66,000 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child's college education?
8.15%
Shelton, Inc., has sales of $21 million, total assets of $19.1 million, and total debt of $6.8 million. Assume the profit margin is 8 percent. What is the company's ROA?
8.80%
The Green Corporation has ending inventory of $485,100, and cost of goods sold for the year just ended was $4,487,175. What is the inventory turnover?
9.25 times
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 10 years to maturity, and a coupon rate of 7.6 percent paid annually. If the yield to maturity is 8.7 percent, what is the current price of the bond?
928.46 Euro
Both Bond Sam and Bond Dave have 9 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has five years to maturity, whereas Bond Dave has 18 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of Bond Sam and Bond Dave?
Bond Sam- -7.54 Bond Dave- -15.54
Both Bond Sam and Bond Dave have 9 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has five years to maturity, whereas Bond Dave has 18 years to maturity. If rates were to suddenly fall by 2 percent instead, what would be the percentage change in the price of Bond Sam and Bond Dave?
Bond Sam- 8.32% Bond Dave- 20.29%
Calculate the debt-equity ratio and equity multiplier for each year.
Debt-equity ratio 2014- 0.41 times 2015- 0.43 times Equity multiplier 2014- 1.41 2015-1.43
Firm A and Firm B have debt-total asset ratios of 25% and 15% and returns on total assets of 8% and 13%, respectively. What is the return on equity for Firm A and Firm B?
Firm A- 10.67% Firm B- 15.29%
Red, Inc., Yellow Corp., and Blue Company each will pay a dividend of $3.25 next year. The growth rate in dividends for all three companies is 4 percent. The required return for each company's stock is 9 percent, 12 percent, and 15 percent, respectively. What is the stock price for each company?
Red- $65 Yellow- $40.63 Blue- $29.55
Calculate the total debt ratio and long-term debt ratio for each year.
Total debt ratio 2014- 0.29 times 2015- 0.30 times Long-term debt ratio 2014- 0.15 times 2015- 0.11 times
Investment X offers to pay you $6,100 per year for 9 years, whereas Investment Y offers to pay you $8,700 per year for 5 years. If the discount rate is 15 percent, what is the present value of these cash flows?
X- $29,106.66 Y- $29,163.75
Investment X offers to pay you $6,100 per year for 9 years, whereas Investment Y offers to pay you $8,700 per year for 5 years. If the discount rate is 5 percent, what is the present value of these cash flows?
X- $43,357.71 Y- $37,666.45