You bought one of Carvalho Corporation’s 6 percent coupon bonds one year ago for $867. These bonds pay annual payments, have a face value of $1,000, and mature 12 years from now. Suppose you decide to sell your bonds today when the required return on the bonds is 7.4 percent. The inflation rate over the past year was 2.9 percent. What was your total real return on this investment?

Six years ago, Hendershot Stables paid $84,000 in cash for equipment. Last year, the company spent $7,600 on equipment upgrades. The company no longer uses this equipment and has received a cash offer of $39,600 from a buyer. The current book value of the equipment, including all updates, is $32,200. If the company decides to keep the equipment and use it for a new project, what value, if any, should the company assign to the equipment?

Which of the following statements are accurate? I. Nondiversifiable risk is measured by beta. II. The risk premium increases as diversifiable risk increases. III. Systematic risk is another name for nondiversifiable risk. IV. Diversifiable risks are market risks you cannot avoid.

VeloWays currently has a cash cycle of 43.4 days. Assume the operations are changed such that the receivables period decreases by 2.6 days, the inventory period by increases by 1.3 days, and the payables period increases by 3.4 days. What will be the length of the cash cycle after these changes?

The Metal Shop produces 1.7 million metal fasteners per year for industrial use. At this level of production, its total fixed costs are $486,000 and its total costs are $791,000. The firm can increase its production by 5 percent, without increasing either its total fixed costs or its variable costs per unit. A customer has made a one-time offer for an additional 50,000 units at a price per unit of $.165. Should the firm sell the additional units at the offered price? Why or why not?

The common stock of Air Express had annual returns of 11.7 percent, 8.8 percent, 16.7 percent, and −7.9 percent over the last four years, respectively. What is the standard deviation of these returns?

Gould Design has $1,000 face value bonds outstanding with 17 years to maturity, a coupon rate of 5 percent, semiannual interest payments, and a current price of $987.78. What is the aftertax cost of debt if the tax rate is 21 percent?

Seven years ago, you paid $324,800 to purchase a rental house. The maintenance expenses average $200 a month and property taxes are $4,800 annually. The house was recently appraised at $439,500. If you sell the house you will incur $14,200 in selling costs. If you decide to use the house as your office, what value should you assign it?

Cookie Dough Manufacturing has a target debt-equity ratio of .76. Its cost of equity is 15.3 percent, and its pretax cost of debt is 9 percent. What is the WACC given a tax rate of 21 percent?

Weisbrough United currently sells 410 units per month at a price of $249 per unit. The variable cost per unit is $132 and the carrying cost per unit is $3.30. The monthly interest rate is 1.2 percent. The firm believes it can increase its sales to 475 units per month if it switches from its cash-only policy to a net 30 credit policy. What is the present value of the switch using the one-shot approach?