1. If you deposit $1,500 today, how much will you have in 3 years, given that interest is 9%, compounded monthly

2. You just won $150,000 scholarship. What is the value of this scholarship if the payment wil be made of $50,000 per year for the next 2 years, followed by payments of $25,000 per year for the next two years. The appropriate interest rate is 8% per year

3. A level-coupon bond has par value of $1,000 that pays $120 per year and has 10 years to maturity. If the yield for similar bonds is currently 14%, what is the bond's value?

4. You are thinking about investing in a $2,000 face value bond which will mature in two years. The bond has an 7% coupon and pays interest semiannually. The current yield to maturity on similar bonds is 5%, and rates are not expected to change. What is the bond's price?

5. The company has just paid a $3 annual dividend on its common stock. The dividend is expected to increase at a constant 5% per year indefinitely. If the required rate of return on the stock is 10%, what is its current value?

6. A firm just paid a dividend of $0.20 per share of common stock and the current stock price is $75. Dividends are expected to grow at a 7% rate for the foreseeable future. What is the current rate of return for this stock? (10 marks)

7. A project requires an investment of $7,300 and generates cash flows of $1600, $2750, $3800, $3000 over years one through four. Calculate the project’s payback period and discounted payback period at a rate of 12%.

8. A firm is considering the following mutually exclusive investment projects: Project A requires an initial outlay of $500 and will return $120 per year for the next seven years. Project B requires an initial outlay of $5,000 and will return $1,350 per year for the next five years. The required rate of return is 10%. What is the net present value of the project with the highest net present value? Which project should the firm choose?

...Reserve of cash flow hedge will primarily be in relief to economic account in the following exercise.
The Group is exposed to consequential risks by the variation of the rates of change, that you/they can influence on its economic result and on the value of the clean patrimony. Particularly:
Whereas the societies of the Group sustain costs denominated in different currencies by those of denomination of the respective proceeds, the variation of the rates of change can influence...

...Netpresentvalue
In finance, the netpresentvalue (NPV) or netpresent worth (NPW) of a time series of cash flows, both incoming and outgoing, is defined as the sum of the presentvalues (PVs) of the individual cash flows. In case when all future cash flows are incoming (such as coupons and principal of a bond) and the only outflow of...

...(60,000)
1 18,000 19,000
2 15,000 17,000
3 18,000 19,000
4 16,000 14,000
5 19,000 15,000
6 14,000 13,000
Evaluate the above proposals according to:
1. Pay Back Period.
2. Accounting Rate of Return (ARR)
3. Netpresentvalue method (NPV)
Proposal A is better than B, because ARR and NPV are higher than Proposal B
2. There are two Proposals. Proposal A and Proposal B. Proposal A costs...

...inventory turnover.
4. A firm that has substantial leased assets that need not be capitalized would tend to
a. Overstate its debt ratio.
b. Overstate its earnings per share.
c. Overstate its return on assets.
d. Overstate its debt to tangible net worth.
5. A measure of profitability and not short-term liquidity is the
a. Accounts receivable turnover ratio.
b. Sales to working capital ratio.
c. Total asset turnover ratio.
d. Acid-test ratio.
6. Return on...

...be 13.487% and a Weighted Average Cost of Capital (WACC) to be at a value of 9.70%. Factoring in the WACC into our projections we found that if the demand maintains at an average rate the project will be at a positive NetPresentValue of $5,997,505.31 with an IRR of 13.21%, a profitability index of 8.84, and an approximate payback period of 6.84 years. Please see Exhibits below for a snapshot of the capital budget and NPV...

...-------------------------------------------------
FINC5001 Capital Market and Corporate Finance
-------------------------------------------------
Workshop 5 – Capital Budgeting II
1. Basic Concepts Review
a) In applying NetPresentValue, what factors do we include, and what factors do we ignore?
Use cash flows not accounting income
Ignore
* sunk costs
* financing costs
Include
* opportunity costs
* side effects...

...Examples Of NetPresentValue (NPV), ROI and
Payback Analysis
Introduction
Terms and Definitions
NetPresentValue - Method of calculating the expected net monetary gain or loss from a project by discounting all expected future cash inflows and outflows to the present point in time.
Discount Rate - Also known...

...possible rounding;
4) Keep at least 2 decimal places in your calculations and final answers, and at
least4 decimal places for interest rates;
5) Interest rates are annual unless otherwise stated;
6) Bonds pay semi-annual coupons unless otherwise stated;
7) Bonds have a par value (or face value) of $1,000; and
8) You may use the back of the exam paper as your scrap paper.
Good Luck.
32 Calculation Questions (4 marks each)
1....

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