11) Suppose you invest $1,000 today, compounded quarterly, with the annual inter
ID: 2627968 • Letter: 1
Question
11) Suppose you invest $1,000 today, compounded quarterly, with the annual interest rate of 5.50%. What is your investment worth in one year? 11) ______
A) $1,056.14 B) $1,025.27 C) $1,050.95 D) $1,025.00
12) Your firm intends to finance the purchase of a new construction crane. The cost is $1,500,000. What is the size of the annual ordinary annuity payment if the loan is amortized over a six-year period at a rate of 8.50%? 12) ______ A) $127,500 B) $228,611.56 C) $329,410.63 D) There is not enough information to answer this question.
13) The next dividend (Div1) is $1.80, the growth rate (g) is 9%, and the required rate of return (r) is 12%. What is the stock price, according to the constant growth dividend model? 13) ______ A) $65.40 B) $30.00 C) $60.00 D) $31.80
14) You want to invest in a stock that pays $5.00 annual cash dividends for the next four years. At the end of the six years, you will sell the stock for $20.00. If you want to earn 12% on this investment, what is a fair price for this stock if you buy it today? 14) ______ A) $27.90 B) $25.42 C) $40.00 D) $30.69
15) Johnson has an annuity due that pays $600 per year for 15 years. What is the present value of the cash flows if they are discounted at an annual rate of 9.50%?
A) $9,000.00 B) $5,693.49 C) $5,143.11 D) $9,675.00
16) Rogue Racing Inc. has $1,000 par value bonds with a coupon rate of 8% per year making semiannual coupon payments. If there are twelve years remaining prior to maturity and these bonds are selling for $896.40, what is the yield to maturity for these bonds?
A) 8.33% B) 9.77% C) 8.00% D) 9.46%
Explanation / Answer
11-B) $1,025.27
12-A) $127,500
13-D) $31.80
14-B) $25.42
15-A) $9,000.00
16-C) 8.00%
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