11- A cost that has already been incurred and cannot be recouped is called as a(
ID: 2636120 • Letter: 1
Question
11- A cost that has already been incurred and cannot be recouped is called as a(n):
a. sunk cost
b. financial cost
c. opportunity cost
d. side cost
e. relevant cost
12- The ABC Co. has $1,000 face value bond outstanding with a market price of $937.6. The bond pays interest annually, matures in 9 years, and has a yield to maturity of 10.7 percent. What is the current yield?
a. 5.11%
b. 10.22%
c. 7.34%
d. 14.94%
13- What is the net present value of the following cash flows? Assume an interest rate of 3.5%
a. $5,492.69
b. $17,387.92
c. $6,247.34
d. $8,235.81
14- The common stock of ABC Industries is valued at $49 a share. The company increases their dividend by 3.1 percent annually and expects their next dividend to be $1.84. What is the required rate of return on this stock?
a. 2.82%
b. 3.61%
c. 4.87%
d. 6.86%
15- A bond is currently selling for $1,087. If the yield to maturity is 10%, the coupon rate will be:
a. less than 10%.
b. equal than 10%.
c. more than 10%.
d. None above
16- Uptown Insurance offers an annuity due with semi-annual payments for 19 years at 4.9 percent interest. The annuity costs $176,239 today. What is the amount of each annuity payment?
a. $7,008.06
b. $5,670.26
c. $8,300.23
d. $4,607.98
17- ABC
Year CF 0 $-11,895 1 $7,722 2 $5,687 3 $5,120Explanation / Answer
11. A
12. d
13. c
14. c
15. c
16. b
17. c
18. a
19. b
20. b
21 . d
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