An investment will pay $800 at the end of each of the next 5 years, $1,100 at the end of Year 6, and $1,300 at the end of Year 7.  What is its present value if other investments of equal risk earn 7 percent annually?

A firm with a 10 percent cost of capital is considering a project for this year’s capital budget.  The project’s expected after-tax cash flows are as follows: Year: 0 1 2 3 4 Cash flow: -$13,000 $5,500 $4,700 $4,000 $5,500 Calculate the project’s profitability index (PI).

The Fontenot Company’s cost of common equity is 13 percent, its before-tax cost of debt is 8 percent, and its marginal tax rate is 40 percent.  Given Fontenot’s market value capital structure below, calculate its WACC. Long-term debt $10,000,000 Common equity   20,000,000 Total capital $30,000,000

The last dividend paid by Klein Company was $1.00. Klein’s growth rate is expected to be a constant 5 percent for 2 years, after which dividends are expected to grow at a rate of 10 percent forever. Klein’s required rate of return on equity (rs) is 12 percent. What is the current price of Klein’s common stock?

An investment will pay $900 at the end of each of the next 3 years, $1,200 at the end of Year 4, and $1,000 at the end of Year 5.  What is its present value if other investments of equal risk earn 9 percent annually?

An annual coupon bond that matures in 20 years sells for $670.76.  It has a face value of $1,000 and a yield to maturity of 10.5 percent.  What is its current yield (CY)?

What is the present value of a perpetuity that pays $2,600 per year if the discount rate is 12.5 percent?

A firm with a 13.5 percent cost of capital is evaluating two projects for this year’s capital budget.  The projects’ expected after-tax cash flows are as follows: Year: 0 1 2 3 Project X: -$12,000 $4,100 $3,800 $5,900 Project Y: -$9,000 $4,900 $4,100 $3,700 If Projects X and Y are mutually exclusive, which one(s) should the firm adopt?

Mack Industries just paid a dividend of $1.00 per share (i.e., D0 = $1.00). Analysts expect the company’s dividend to grow 20 percent this year (i.e., D1 = $1.20), and 15 percent next year. After two years the dividend is expected to grow at a constant rate of 5 percent. The required rate of return on the company’s stock is 12 percent. What should be the current price of the company’s stock?

A firm with a 9 percent cost of capital is evaluating two projects for this year’s capital budget.  The projects’ expected after-tax cash flows are as follows: Year: 0 1 2 3 Project X: -$15,000 $6,900 $6,600 $7,200 Project Y: -$6,000 $2,000 $2,300 $1,900 If Projects X and Y are mutually exclusive, which one(s) should the firm adopt?