1. ABC Company offers a 5% coupon bond with a current market price of $850.25. The yield to maturity is 7.34%. The face value is $1,000. Interest is paid semiannually. What is the number of years until the bond matures?
2. ABC Company has 6 percent bonds outstanding that mature in 13 years. The bonds can be called in 3 years at a call price of $1150. The bonds pay interest semiannually and have a face value of $1,000. Currently, the bonds are selling for $993 each. What is the yield to call (YTC)?
3. Project A requires an initial investment of $7,500 at t = 0. Project A has an expected life of 4 years with cash inflows of $5,000, $4,500, $900, $2,000 at the end of Years 1, 2, 3, and 4 respectively. The project has a required return of 15%. What is the equivalent annual annuity?
4. Project A requires an initial investment of $7,500 at t = 0. Project A has an expected life of 4 years with cash inflows of $5,000, $4,500, $900, $2,000 at the end of Years 1, 2, 3, and 4 respectively. The project has a required return of 15%. What is the equivalent annual annuity?
5. Over the past six years, a stock had annual returns of 10 percent, 5 percent, 7 percent, 8 percent, 2 percent, and -11 percent, respectively. What is the standard deviation of these returns?
6. A 12-year project is expected to generate annual sales of $294,798, variable costs of $37,508, and fixed costs of $59,154. The annual depreciation is $29,847 and the tax rate is 34 percent. What is the annual operating cash flow?
7. What is the NPV of this project if the required rate is 19%?
Year CF
0 -$1,647
1 $1,011
2 $1,609
3 $2,310