1- Suppose that you read in The Wall Street Journal that a bond has a coupon rate of 9 percent, a price of 71.375% (of face value) , and pays interest annually. Rounded to the nearest whole percent, what would be the bond’s “current” yield?
a. 11%
b. 13%
c. 15%
d. 17%
e. 20%
2- A 12-year bond has a 9 percent annual coupon, a yield to maturity of 8 percent, and a face value of $1,000. What is the price of the bond?
a. $1,469
b. $1,000
c. $ 928
d. $1,075
e. $1,957
3. Tuttle Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that if a project's projected NPV is negative, it should be rejected.
WACC: 12.00%
Year 0 1 2 3 4
Cash flows -$1,000 $350 $350 $350 $350
a. $77.49
b. $81.56
c. $63.05
d. $90.15
e. $94.66