Which bond would most likely possess the highest degree of interest rate risk?

What is the profitability index of the following investment if the required return = 6%?             Year       0         1          2          3                    CF       -150     +$50    +$70    +$70

A project costs $80,000 and will be depreciated straight-line to zero over its 4 year life. The project generates annual OCF of $22,000 and the fixed assets will be sold for $9,000 at the termination of the project. If the firm has a tax rate of 35% and a required return of 5%, what is the NPV?

Suppose that you have just purchased a share of stock for $40. The most recent dividend was $2 and dividends are expected to grow at a rate of 5% indefinitely. What must your required return be on the stock?

Calculate the NPV of the following project cash flow using a discount rate of 7%: Yr 0 = –$1,000; Yr 1 = –$80; Yr 2 = +$100; Yr 3 = +$400; Yr 4 = +$500; Yr 5 = +$500

A bond sold five weeks ago for $1,100. The bond is worth $1,150 in today’s market. Which of the following is TRUE?

Given the following information and assuming straight-line depreciation to zero, what is the profitability index for this project? Initial investment = $75,000; life = 5 years; operating cash flow = $21,000 per year; salvage value = $10,000 in year 5; tax rate = 35%; discount rate = 10%.

Which one of the following is a disadvantage of the discounted payback method?

The following two bonds (A and B) make semi-annual payments. They are both identical, except for the coupon rate. What is the price of bond B?  Note: find bond A’s missing yield to maturity (YTM) first, use it for bond B’s YTM, then find bond B’s price. All variables have to be entered in half-year terms! Do not round you intermediate answers.                                                                         Bond A           Bond B                         Face Value                       $1,000             $1,000                         Coupon Rate as APR          7%                 5%                         Years to maturity                 30                  30                         Price                           $1,200.00                     ?

How much would you pay for a share of ABC Corporation stock today if the next dividend will be $4 per share, your required return on equity investments is 10%, and the stock is expected to be worth $90 one year from now?