the bonds issued by Jensen Son bear a 6 percent coupon, payable semiannually . The bond matures in 8 years and has a $1,000 face value. Currently,...

1. the bonds issued by Jensen & Son bear a 6 percent coupon, payable semiannually. The bond matures in 8 years and has a $1,000 face value. Currently, the bond sells at par. What is the yield to maturity?
2. A.5.87 percent
3. B.5.97 percent
4. C.6.00 percent
5. D.6.09 percent
6. E.6.17 percent

3 points  

QUESTION 2

1. A General Co. bond has an 8 percent coupon and pays interest annually. The face value is $1,000 and the current market price is $1,020.50. The bond matures in 20 years. What is the yield to maturity?
2. A.7.79 percent
3. B.7.82 percent
4. C.8.00 percent
5. D.8.04 percent
6. E.8.12 percent

3 points  

QUESTION 3

1. You intend to purchase a 10-year, $1,000 face value bond that pays interest of $60 every 6 months ( semiannual). If your nominal annual required rate of return is 10 percent with semiannual payments, how much should you be willing to pay for this bond?
2. A.$ 826.31
3. B.$1,086.15
4. C.$ 957.50
5. D.$1,431.49
6. E.$1,124.62

3 points  

QUESTION 4

1. The Seattle Corporation has been presented with an investment opportunity which will yield end-of-year cash flows as follows:
2.      Years 1 through 4       $30,000 per year
3.      Years 5 through 9       $35,000 per year
4.      Year 10                         $40,000 per year
5.      This investment will cost the firm $150,000 today, and the firm's cost of capital is 10 percent. What is the NPV for this investment?
6. A.$135,984
7. B.$ 18,023
8. C.$219,045
9. D.$ 51,138
10. E.$ 92,146

3 points  

QUESTION 5

1. Your firm wants to save $250,000 to buy some new equipment three years from now. The plan is to set aside an equal amount of money on the first day of each year starting today. The firm can earn a 4.7 percent rate of return. How much does the firm have to save each year to achieve their goal?
2. A.$75,966.14
3. B.$76,896.16
4. C.$78,004.67
5. D.$81.414.14
6. E.$83,333.33

3 points  

QUESTION 6

1. Your great-aunt left you an inheritance in the form of a trust. The trust agreement states that you are to receive $2,500 on the first day of each year, starting immediately and continuing for fifty years. What is the value of this inheritance today if the applicable discount rate is 6.35 percent?
2. A.$36,811.30
3. B.$37,557.52
4. C.$39,204.04
5. D.$39,942.42
6. E.$40,006.09

3 points  

QUESTION 7

1. Your car dealer is willing to lease you a new car for $299 a month for 60 months. Payments are due on the first day of each month starting with the day you sign the lease contract. If your cost of money is 4.9 percent, what is the current value of the lease?
2. A.$15,882.75
3. B.$15,906.14
4. C.$15,947.61
5. D.$16,235.42
6. E.$16,289.54

3 points  

QUESTION 8

1. Toni adds $3,000 to her savings on the first day of each year. Tim adds $3,000 to his savings on the last day of each year. They both earn a 9 percent rate of return. What is the difference in their savings account balances at the end of thirty years?
2. A.$35,822.73
3. B.$36,803.03
4. C.$38,911.21
5. D.$39,803.04
6. E.$40,115.31

3 points  

QUESTION 9

1. Marko, Inc. is considering the purchase of ABC Co. Marko believes that ABC Co. can generate cash flows of $5,000, $9,000, and $15,000 over the next three years, respectively. After that time, they feel the business will be worthless. Marko has determined that a 14 percent rate of return is applicable to this potential purchase. What is Marko willing to pay today to buy ABC Co.?
2. A.$19,201.76
3. B.$21,435.74
4. C.$23,457.96
5. D.$27,808.17
6. E.$31,758.00

3 points  

QUESTION 10

1. You have some property for sale and have received two offers. The first offer is for $189,000 today in cash. The second offer is the payment of $100,000 today and an additional $100,000 two years from today. If the applicable discount rate is 8.75 percent, which offer should you accept and why?
2. A.You should accept the $189,000 today because it has the higher net present value.
3. B.You should accept the $189,000 today because it has the lower future value.
4. C.You should accept the second offer because you will receive $200,000 total.
5. D.You should accept the second offer because you will receive an extra $11,000.
6. E.You should accept the second offer because it has a present value of $194,555.42.

3 points  

QUESTION 11

1. On December 1, you borrow $210,000 to buy a house. The mortgage rate is 8.25 percent. The loan is to be repaid in equal monthly payments over 20 years. The first payment is due on January 1. Which one of the following statements is true assuming that you repay the loan as agreed?
2. A.The total amount paid is about $429,442.
3. B.The monthly payment is $2,037.30.
4. C.The total interest paid is $278,952.
5. D.The monthly interest rate is .75 percent.
6. E.The first payment reduces the principle balance by $1,443.75.

3 points  

QUESTION 12

1. What is the net present value of a project that has an initial cash outflow of $12,670  and the following cash inflows? The required return is 11.5 percent.
2.                                                 Year    Cash Inflows
3.                                                    1         $4,375
4.                                                    2          $      0
5.                                                    3         $8,750
6.                                                    4         $4,100
7. A.$370.16
8. B.$768.20
9. C.$218.68
10. D.$1,249.65
11. E.$1,371.02

3 points  

QUESTION 13

1. You are considering two mutually exclusive projects with the following cash flows. Will your choice between the two projects differ if the required rate of return is 8 p ercent rather than 11 percent? If so, what should you do?
2.                                     Year                 Project A          Project B
3.                                        0                   -$240,000        -$198,000
4.                                        1                   $           0        $110,800
5.                                        2                   $         0         $ 82,500
6.                                        3                   $325,000        $ 45,000
7. A.yes; Select A at 8 percent and B at 11 percent.
8. B.yes; Select B at 8 percent and A at 11 percent.
9. C.yes; Select A at 8 percent and select neither at 11 percent.
10. D.no; Regardless of the required rate, project A always has the higher NPV.
11. E.no; Regardless of the required rate, project B always has the higher NPV.

3 points  

QUESTION 14

1. It will cost $2,600 to acquire a small ice cream cart. Cart sales are expected to be $1,400 a year for three years. After the three years, the cart is expected to be worthless as that is the expected remaining life of the cooling system. What is the payback period of the ice cream cart?
2. A..86 years
3. B.1.46 years
4. C.1.86 years
5. D.2.46 years
6. E.2.86 years

3 points  

QUESTION 15

1. Yancy is considering a project which will produce cash inflows of $900 a year for 4 years. The project has a 9 percent required rate of return and an initial cost of $2,800. What is the payback period?
2. A.3.11 years
3. B.3.18 years
4. C.3.82 years
5. D.4.18 years
6. E.never

3 points  

QUESTION 16

1.  Braun Industries is considering an investment project which has the following cash flows:
2.                   Year              Cash Flow
3.                    0                -$1,000
4.                    1                    400
5.                    2                    300
6.                    3                    500
7.                    4                    400
8.  The company's cost of funds is 10 percent. What is the project's payback, internal rate of return, and net present value?
9. A.Payback = 2.4, IRR = 10.00%, NPV = $600.
10. B.Payback = 2.4, IRR = 21.22%, NPV = $260.
11. C.Payback = 2.6, IRR = 21.22%, NPV = $300.
12. D.Payback = 2.6, IRR = 21.22%, NPV = $260.
13. E.Payback = 2.6, IRR = 24.12%, NPV = $300.

3 points  

QUESTION 17

1. As the director of capital budgeting for Denver Corporation, you are evaluating two mutually exclusive projects with the following net cash flows:
2.                         Project X  Project Z
3.             Year        Cash Flow   Cash Flow
4.              0          -$100,000  -$100,000
5.              1            50,000    10,000
6.              2            40,000    30,000
7.              3            30,000    40,000
8.              4            10,000    60,000
9.      If Denver's cost of capital is 15 percent, which project would you choose?
10. A.Neither project.
11. B.Project X, since it has the higher IRR.
12. C.Project Z, since it has the higher NPV.
13. D.Project X, since it has the higher NPV.
14. E.Project Z, since it has the higher IRR.

3 points  

QUESTION 18

1.  they have $8,000 they can use to begin the savings plan

10 points  

QUESTION 19

1. How much money do the Diamanti's need to deposit annually in order to reach their goal to fund Lucinda's education fully? Remember that the  Diamanti's have $8,000 to invest today. 

5 points  

QUESTION 20

1. Please use the following facts to analyze this nest two questions:
2. Assume you just received a bill for services you and have the following two payment options:
3. Option 1:
4. Pay the entire bill of $600 now  
5. Or 
6. Option 2:
7. Pay:
8. $130 now
9.    And
10. $130 for each of the next 4 months
11. What annual interest rate (APR) are you paying if you choose Option 2? Assume monthly compounding. Round you answer to the nearest two decimal points. Do not use $, commas or %. For example, 25.34% would be entered as 25.34.

10 points  

QUESTION 21

1. What Effective Annual Rate are you paying if you choose Option 2? Assume monthly compounding. Round you answer to the nearest two decimal points. Do not use $, commas or %. For example, 25.34% would be entered as 25.34.