A firm’s bonds have a maturity of 28 years with a $1,000 face value, a 10 percent semiannual coupon, are callable in 6 years at $1,100, and currently sell at a price of $1,173.  What is their yield to call (YTC)?

Mary recently received a credit card with a nominal interest rate of 19 percent.  With the card, she purchased some new clothes for $375.  The minimum payment on the card is only $10 per month.  If Mary makes the minimum monthly payment and makes no other charges, how long will it be before she pays off the card?

Schallheim Corporation’s outstanding bonds have a $1,000 par value, a 14 percent semiannual coupon, 17 years to maturity, and an 11.5 percent yield to maturity (YTM).  What is the bond’s price?

What is the present value of an annuity due that pays $1,600 per year for 9 years, assuming the annual discount rate is 9 percent?

You have the following data on three stocks: Stock Standard Deviation Beta A 20% 0.59 B 10% 0.61 C 12% 1.29 If you are a strict risk minimizer, you would choose Stock ____ if it is to be held in isolation and Stock ____ if it is to be held as part of a well-diversified portfolio.

Wei Inc. is considering a capital budgeting project that has an expected return of 25% and a standard deviation of 30%. What is the project’s coefficient of variation?

Leslie Industries is considering the following independent projects for the coming year: Project RequiredInvestment ExpectedRate of Return Risk X $3 million 12.0% High Y   2 million 10.0% Average Z   5 million 10.5% Low Leslie’s WACC is 11.5 percent, but it adjusts for risk by adding 2 percent to the WACC for high-risk projects and subtracting 2 percent for low-risk projects.  Which project(s) should Leslie accept assuming it faces no capital constraints?

Suppose you invest $4,500 today in an account that earns a nominal annual rate (inom) of 16 percent, with interest compounded semiannually.  How much money will you have after 8 years?

A firm with a 13 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: -$9,000 $4,300 $3,900 $3,000 Project Y: -$11,000 $5,100 $4,800 $5,000 If Projects X and Y are mutually exclusive, which one(s) should the firm adopt?

A firm with a 9.5 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: -$15,000 $6,200 $6,800 $5,400 $6,800 Calculate the project’s internal rate of return (IRR).