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?

Your broker offers you the opportunity to purchase a bond with a coupon rate of 7% per year and a face value of $1,000. If the yield to maturity on similar bonds is 7%, this bond should:

Today, the bond market requires a return of 7% on the 5-year bonds issued by Action Corporation. The 7% percent is referred to as

The annual coupon payment of a bond divided by its price is called the bond’s:

A firm has 2,000,000 shares outstanding. If 4 directors will be elected, how many shares do you need to control to assure yourself a seat on the board under cumulative voting procedures?

Which of the following cash flows are included in the analysis of investment opportunities?

What is the payback period of a $16,000 investment with the following cash flows?             Year                              1                2                3                4                5                       Cash Flow            +$3,000      +$4,000      +$5,000      +$8,000      +$9,000