1.What's the present value of a 4-year ordinary annuity of $2,250 per year plus an additional $3,000 at the end of Year 4 if the interest rate is 5%?
a. $8,509
b. $8,957
c. $9,428
d. $9,924
e. $10,446
2.Franklin Distribution stock price at the end of last year was $33.50, and its book value per share was $25.00. What was its market/book ratio?
a) 1.34
b) 1.41
c) 1.48
d) 1.55
e) 1.63
3.Langly.'s latest EPS was $3.50, its book value per share was $22.75, it had 215,000 shares outstanding, and its debt ratio was 46%. How much debt was outstanding?
a) 3,393,7378
b) 3,572,356
c) 3,760,375
d) 3,958,289
e) 4,166,620
4. Everly Company's stock has a beta of 1.40, the risk-free rate is4.25%, and the market risk premium is5.50%. What is the firm's required rate of return?
a) 11.36%
b) 11.65%
c) 11.95%
d) 12.25%
e) 12.55%
5. Calculate the required rate of return for Hotwire Inc., assuming that (1) investors expect a 4.0% rate of inflation in the future, (2) the real risk-free rate is 3.0%, (3) the market risk premium is 5.0%, (4) the firm has a beta of 1.00, and (5) its realized rate of return has averaged 15.0% over the last 5 years.
a) 10.29%
b) 10.83%
c) 11.40 %
d) 12.00%
e) 12.60%
6. Tradesman has a beta of 1.10, the real risk-free rate is 2.00%, investors expect a 3.00% future inflation rate, and the market risk premium is 4.70%. What is Scheuer's required rate of return?
a. 9.43%
b. 9.67%
c. 9.92%
d. 10.17%
e. 10.42%
7. Messer.'s sales last year were $395,000, and its year-end receivables were $42,500. Harper sells on terms that call for customers to pay 30 days after the purchase, but many delay payment beyond Day 30. On average, how many days late do customers pay? Base your answer on this equation: DSO - Allowed credit period = Average days late, and use a 365-day year when calculating the DSO.
a) 7.95
b) 8.37
c) 8.81
d) 9.27
e) 9.74
8. A 25-year, $1,000 par value bond has an 8.5% annual coupon. The bond currently sells for $875. If the yield to maturity remains at its current rate, what will the price be 5 years from now?
a) 839.31
b) 860.83
c) 882.90
d) 904.97
e) 927.60