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?

If its yield to maturity declined by 1%, which of the following bonds would have the largest percentage increase in value?

What is the present value of an ordinary annuity that pays $3,600 per year for 5 years, assuming the annual discount rate is 4 percent?

Nancy recently received a credit card with a nominal interest rate of 22 percent.  With the card, she purchased some new clothes for $250.  The minimum payment on the card is only $20 per month.  If Nancy makes the minimum monthly payment and makes no other charges, how long will it be before she pays off the card?

A firm’s bonds have a maturity of 23 years with a $1,000 face value, a 7 percent semiannual coupon, are callable in 4 years at $1,075, and currently sell at a price of $1,165.  What is their yield to call (YTC)?