1. In the early January of 2015, Abigail invested $2,500 in shares of the Pathfinder Fund when the NAV was $11.12. All dividends and capital gains are reinvested in the fund. At the end of December, 2015 the NAV was $11.50 and she held 235.8 shares in her account. Her holding period return was
A) 3..42% B)8.47% C)4.88% D)7.81%
2. A company has a proposed 2-year project with the cash flows shown below and would like to calculate the NPV of this project so that they can decide whether to pursue the project or not. The company has a target capital structure of 60% equity and 40% debt. The beta for this firms stock is 1.4, the risk-free rate is 4.5, and the expected market risk premium is 6.4%. The bonds for this company pay interest semiannually and have a coupon interest rate of 6%, 16 years to maturity, a face value of $1,000, and a current price of 1,108.64. If the corporate tax rate is 32%, what is the NPV of the proposed project for this firm? (Answer to the nearest dollar, but do not use a dollar sign).
Years Cash Flows
0 -3,000
1 1,000
2 3,000