finalterm review公司理财复习题

一、Multiple choices1.Your grandfather placed $5,000 in a trust fund for you. In 12 years the fundwill be worth $10,000. What is the rate of return on the trust fund?A) 3.70% B) 4.16% C) 5.95% D) 6.90% E) 8.42%2.You are supposed to receive $3,000 four years from now. At an interest rateof 8%, what is that $3,000 worth today?A) $1,591.97 B) $1,892.43 C) $2,205.09 D) $2,497.91 E)$2,699.013.The company you work for will deposit $150 at the end of each month intoyour retirement fund. Interest is compounded monthly. You plan to retire 25 years from now and estimate that you will need $2,000 per month out of the account for the ensuing 20 years. If the account pays 10% compounded monthly, how much do you need to put into the account each month, in addition to your company's deposit, in order to meet your objective?A) $ 0.00; the company's deposit fully funds your retirements objectiveB) $105.42 C) $ 6.20 D) $21.96 E) $34.334.Given the following information, what is the firm's weighted average cost ofcapital? Market value of equity = $30 million; market value of debt = $20 million; cost of equity = 15%; cost of debt = 9%; equity beta = 1.4; tax rate = 35%.A) 11.34% B) 12.60% C) 12.97% D) 13.32% E) 14.08%5.What is the future value in 12 years of $800 payments received at thebeginning of each year for the next 12 years? Assume an interest rate of8.25%.A) $14,259.63 B) $15,408.65 C) $16,679.86 D) $18,495.48 E)$20,782.156.At the end of each year for the next 8 years you will receive cash flows of$500. If the appropriate discount rate is 7.5%, how much would you pay for this annuity?A) $4,000.00 B) $5,841.22 C) $1,259.47 D) $2,928.65 E)$3,148.307.Your parents agree to pay half of the purchase price of a new car when yougraduate from college. You will graduate and buy the car two years from now. You have $9,000 to invest today and can earn 12% on invested funds.If your parents match the amount of money you have in two years, what is the maximum you can spend on the new car?A) $ 7,260 B) $11,290 C) $15,000 D) $19,250 E) $22,5798.You need $3,000 to buy a new stereo for your car. If you have $1,200 toinvest at 6% compounded annually, how long will you have to wait to buy the stereo?A) 6.58 years B) 8.42 years C) 11.60 years D) 14.58 years E)15.73 years9.Cornerstone Industries has a bond outstanding with an 8% coupon rate anda market price of $874.68. If the bond matures in 6 years and interest ispaid semiannually, what is the YTM?A) 4.9% B) 6.9% C) 8.9% D) 10.9% E) 12.9%Use the following to answer questions 10-14:A firm has an expected perpetual EBIT = $4,000. The unlevered cost of capital = 15% and there are 20,000 shares of stock outstanding. The firm is considering issuing bonds of $8,800 to add financial leverage to the firm. The cost of debt = 10%, and the tax rate = 34%. There are no flotation costs. 10.What is the value of the firm before the restructuring? Assume there are notaxes.A) $15,930 B) $17,600 C) $18,519 D) $26,667 E) $30,00011.Considering taxes, what is the value of the firm before the restructuring?A) $15,930 B) $17,600 C) $18,519 D) $26,667 E) $30,00012.What is the value of the firm after the restructuring? Taxes are considered.A) $15,930 B) $17,600 C) $18,519 D) $20,592 E) $22,46113.What is the value of the equity after the restructuring?A) $11,792 B) $12,600 C) $12,819 D) $13,592 E) $16,46114.What is the cost of equity after the restructuring?A) 14.8% B) 17.5% C) 18.4% D) 20.0% E) 22.5%Use the following to answer questions 15-17:Rob and Laura wish to buy a new home. The price is $387,500 and they plan to pay 20% of it as down payment. New Rochelle Savings and Loan will lend them the remainder at a 9% fixed APR for 30 years, with monthly payments to beginin one month. (Ignore taxes.)15.How much will their monthly payments be?A) $2,494.33 B) $2,825.99 C) $3,512.56 D) $3,645.45 E)$3,760.4516.What will the outstanding balance of the loan be after ten years assumingyou make the first 120 payments exactly on time?A) $ 99,610 B) $135,467 C) $277,232 D) $239,144 E) $170,50917.Suppose Rob wants to pay off the loan in 15 years. How much extra musthe pay each month to do so?A) $311.25 B) $501.19 C) $649.90 D) $811.35 E) $914.4718.Given the following cash flows, what is the present value if the discountrate is 8%?Y ear1234Cash Flow$400$250$900$1925A) $1,415.07 B) $2,714.09 C) $2,865.70 D) $3,058.96 E)$3,222.6219.King Noodles' bonds have a 9% coupon rate. Interest is paid quarterly andthe bonds have a maturity of 10 years. If the appropriate discount rate is 10% on similar bonds, what is the price of King Noodles' bonds?A) $937.24 B) $938.55 C) $971.27 D) $989.63 E) $991.2720.The bonds of Microhard, Inc. carry a 12% annual coupon, have a $1,000face value, and mature in 5 years. Bonds of equivalent risk yield 9%. What is the market value of Microhard's bonds?A) $1,011.20 B) $1,087.25 C) $1,095.66 D) $1,116.69 E)$1,160.2521.A firm's stock has a required return of 12%. The stock's dividend yield is5%. What dividend did the firm just pay if the current stock price is $50?A) $2.18 B) $2.34 C) $2.50 D) $2.87 E) $3.6022.Etling Inc.'s dividend is expected to grow at 5% for the next 2 years andthen at 3% forever. If the current dividend is $2 and the required return is 14%, what is the price of the stock?A) $19.43 B) $23.82 C) $25.15 D) $27.58 E) $29.7023.Asset A has an expected return of 10%. The expected market return is14% and the risk-free rate is 5%. What is asset A's beta?A) 0.33 B) 0.56 C) 0.67 D) 0.88 E) 1.15Use the following to answer questions 24-25A firm needs to purchase equipment for a new project. The total cost of the equipment is $2 million. It is estimated that the aftertax cash inflows from the project will be $210,000 annually in perpetuity. The market value debt-to-assets ratio is 40%. The firm's cost of equity is 13% and its pretax cost of debt is 8%. The tax rate is 34%. Assume the project is of similar risk to the firm's existing operations.24.What is the weighted average cost of capital?A) 6.09% B) 8.73% C) 8.95% D) 9.05% E) 9.91%25.What is the NPV of the proposed project?A) $ 33,966 B) $ 65,990 C) $ 98,542 D) $119,072 E) $128,03426.J&J Manufacturing just issued a bond with a $1,000 face value and a coupon rate of 8%. If the bond has a life of 20 years, pays annual coupons, and the yield to maturity is 7.5%, what is the present value of the bond's face value?A) $ 235.41 B) $ 341.15 C) $ 815.56 D) $1,000.00E) $1,050.9727.A stock that pays a constant dividend of $1.50 forever currently sells for $10.71. What is the required rate of return?A) 10% B) 12% C) 13% D) 14% E) 15%28.Given the following information, what is the firm's weighted average cost of capital? Market value of equity = $30 million; market value of debt = $20 million; cost of equity = 15%; cost of debt = 9%; equity beta = 1.4; tax rate = 35%.A) 11.34% B) 12.60% C) 12.97% D) 13.32% E) 14.08%Use the following to answer questions 4-5A firm needs to purchase equipment for a new project. The total cost of the equipment is $2 million. It is estimated that the aftertax cash inflows from the project will be $210,000 annually in perpetuity. The market value debt-to-assets ratio is 40%. The firm's cost of equity is 13% and its pretax cost of debt is 8%. The tax rate is 34%. Assume the project is of similar risk to the firm's existing operations.29.What is the weighted average cost of capital?A) 6.09%C) 8.95%D) 9.05%E) 9.91%30.What is the NPV of the proposed project?A) $ 33,966B) $ 65,990C) $ 98,542D) $119,072E) $128,03431.You need $3,000 to buy a new stereo for your car. If you have $1,200 to invest at 6% compounded annually, how long will you have to wait to buy the stereo?A) 6.58 yearsB) 8.42 yearsC) 11.60 yearsD) 14.58 yearsE) 15.73 years32.An insurance company promises to pay Jane $1 million on her 65th birthday in return for a one-time payment of $125,000 today. (Jane is 30 now.) At what rate of interest would Jane be indifferent between accepting the company's offer and investing the premium on her own?B) 4.5%C) 5.1%D) 6.1%E) 7.2%33.An account was opened with an investment of $2,000 10 years ago. The ending balance in the account is $3,500. If interest was compounded annually, what rate was earned on the account?A) 2.66%B) 3.22%C) 3.95%D) 4.81%E) 5.76%34.What is the future value in 12 years of $800 payments received at the beginning of each year for the next 12 years? Assume an interest rate of8.25%.A) $14,259.63B) $15,408.65C) $16,679.86D) $18,495.48E) $20,782.1535.At the end of each year for the next 8 years you will receive cash flows of$500. The initial investment is $2,500. What rate of return are you expecting from this investment?A) 11.81%B) 10.27%C) 9.01%D) 8.28%E) 7.21%36.You agree to loan your parents $32,000 to buy a new van. They agree to pay you $650 a month for 5 years. The ________________.A) interest rate on the loan is 0.75% per monthB) APR on the loan is 7.87%C) EAR on the loan is 8.08%D) APR on the loan is 8.22%E) EAR on the loan is 8.38%37.The stock of MTY Golf World currently sells for $90 per share. The firm has a constant dividend growth rate of 6% and just paid a dividend of $5.09. If the required rate of return is 12%, what will the stock sell for one year from now?A) $ 90.00B) $ 93.52C) $ 95.40D) $ 99.80E) $112.7838.Llano's stock is currently selling for $40 per share. The expected dividend one year from now is $2 per share and the required return is 13%. What is this firm's dividend growth rate assuming the constant dividend growth model is appropriate?A) 8%B) 9%C) 10%D) 11%39.Asset A has an expected return of 20.4% and a beta of 1.6. The expected market return is 15%. What is the risk-free rate?A) 2%B) 4%C) 5%D) 6%E) 8%40.The market price of a bond is $1,236.94, it has 14 years to maturity, a $1,000 face value, and pays an annual coupon of $100 in semiannual installments. What is the yield to maturity?A) 3.18%B) 4.26%C) 5.37%D) 6.11%E) 7.27%41.King Noodles' bonds have a 9% coupon rate. Interest is paid quarterlyand the bonds have a maturity of 10 years. If the appropriate discount rate is 10% on similar bonds, what is the price of King Noodles' bonds?A) $937.24B) $938.55C) $971.27D) $989.63E) $991.27Use the following to answer questions 17-19:Rob and Laura wish to buy a new home. The price is $387,500 and they plan to pay 20% of it as down payment. New Rochelle Savings and Loan will lend them the remainder at a 9% fixed APR for 30 years, with monthly payments to begin in one month. (Ignore taxes.)42.How much will their monthly payments be?A) $2,494.33B) $2,825.99C) $3,512.56D) $3,645.45E) $3,760.4543.What will the outstanding balance of the loan be after ten yearsassuming you make the first 120 payments exactly on time?A) $ 99,610B) $135,467C) $277,232D) $239,144E) $170,50944.Suppose Rob wants to pay off the loan in 15 years. How much extra must he pay each month to do so?A) $311.25 B) $501.19 C) $649.90 D) $811.35 E) $914.4745.Etling Inc.'s dividend is expected to grow at 5% for the next 2 years and then at 3% forever. If the current dividend is $2 and the required return is 14%, what is the price of the stock?A) $19.43 B) $23.82 C) $25.15 D) $27.58 E) $29.7046.Given the following cash flows, what is the present value if the discount rate is 8%?Y ear1234Cash Flow$400$250$900$1925A) $1,415.07B) $2,714.09C) $2,865.70D) $3,058.96E) $3,222.6247.If the following bonds are identical except for coupon, what is the priceof bond B?Bond A Bond BFace value$1,000$1,000Semiannual Coupon$50$40Years to maturity2525Price$1,150.00?A) $944.58B) $ 975.31C) $1,037.86D) $1,150.00E) $1,279.4748.You have $100,000 to invest. Your bank offers one-year certificates of deposit with a stated rate of 3.50% compounded quarterly. What rate compounded semiannually would provide you with the same amount of money at the end of one year?A) 3.485%B) 3.500%C) 3.505%D) 3.510%E) 3.515%49.Fast Eddie's Used Cars will sell you a Mazda Miata for $5,000. You agree to make weekly payments of $60 for 2 years, beginning one week after you buy the car. What is the EAR of this loan?A) 20.04%B) 22.85%C) 25.61%D) 32.34%E) 43.01%50.Bonds will be issued for a new project. Bonds in the same risk class issued by another firm are currently priced at $1,068.55, have 15 years remaining to maturity, and pay coupons of $90 every year. If this firm's marginal tax rate is 35%, what is the project's pretax cost of debt?A) 8.19%B) 7.47%C) 5.32%D) 6.12%E) 9.00%。