FINANCE-ABC Company’s bonds pay 8% annual coupon interest

ABC Company’s bonds pay 8% annual coupon interest and are selling
at 105 percent of par. The yield to maturity

is less than

is equal to

is greater
than 8%

Project A requires an
initial investment of $9,000 at t = 0. Project A has an expected life of
2 years with after-tax cash inflows of $6,000 and $8,500 at the end of Years 1
and 2, respectively. The project has a required return of 11%. What
is the equivalent annual annuity?
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)?
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
A project requires $15,200 of equipment that is classified as
a 7-year property. What is the depreciation expense in Year 2 given the
following MACRS depreciation allowances, starting with year one: 14.29, 24.49,
17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent?
ABC Company has $1,000
face value bonds outstanding. These bonds pay interest semiannually, mature in
9 years, and have a 6.5 percent coupon.The current price of the bond is $1100. What is the yield
to maturity?
Suppose the nominal rate is 20.21% and the inflation rate is
4.68%. Solve for the real rate. Use the Fisher Effect formula.
What is the
project’s initial investment outlay based on the following information: The
machinery could be purchased for $27,378. Shipping and installation costs would
cost another $3,982. The project would require an initial investment in net
working capital of $7,157. The company’s tax rate is 30%.
ABC Company purchased a new
machinery 4 years ago for $64,613. Today, it is selling this equipment for
$13,284. What is the after-tax salvage value if the tax rate is 24 percent?
The MACRS allowance percentages
are as follows, commencing with year one: 20.00, 32.00, 19.20, 11.52, 11.52,
and 5.76 percent.

You have a
$65,037 portfolio that consists of $16,616 invested in Stock A, $18,213
invested in Stock B, $6,023 invested in Stock C, and the remainder in Stock D.
The portfolio has a return of 23.6 percent. The return for Stock A is 16.4
percent, for Stock B is 32.5 percent, and for Stock C is 4.4 percent. What is
the return for Stock D?
Five years ago, ABC Company invested $49,719 million in a
machinery. The investment in net working capital was $4,021 which would be
recovered at the end of the project. Today, ABC Company is selling the
machinery for $18,138 million. The book value of the machinery is $20,646
million. The tax rate is 23 percent. What are the terminal cash flows in Year
A 12-year project is
expected to generate annual sales of $268,707, variable costs of $40,925, and
fixed costs of $39,845. The annual depreciation is $12,041 and the tax rate is
36 percent. What is the annual operating cash flow?
A project has an initial requirement of $80,763 for
equipment.The equipment will be depreciated to a zero book value over the
5-year life of the project.The
investment in net working capital will be $22,160.All of the net working capital
will be recouped at the end of the 5 years.The equipment will have an estimated
salvage value of $13,921. The annual operating cash flow is $38,463. The
cost of capital is 14 percent. What is the project’s net present value if the
tax rate is 29 percent?
You have invested $65,588 portfolio in three securities. The
three securities comprise of the risk-free asset, Stock A, and Stock B. The
beta of stock A is 2.2 while the beta of stock B is 0.5. 17% of the portfolio
is invested in the risk-free security. What is the dollar amount invested in
stock B if the beta of the portfolio is 1.3?
ABC Company is
considering a new project. The project is expected to generate annual sales of
$65,476, variable costs of $18,689, and fixed costs of $9,650. The depreciation
expense each year is $10,884 and the tax rate is 25 percent. What is the annual
operating cash flow?
ABC Company is considering an investment that will cost the
company $486 at time=0. The after-tax cash flows are expected to be $89 each year
for 13 years. What is the payback period?
The risk-free
rate is 6.3%, the market risk premium is 11.2%, and the stock’s beta is
0.88. What is the required rate of return on the stock, E(Ri)?
Based on the following information, what is the portfolio beta?
















ABC Inc. is considering an investment of $1,763 million with
after-tax cash inflows of $422 million per year for six years and an additional
after-tax salvage value of 71 million in Year 6. The required rate of return is
15%. What is the investment’s Profitability Index (PI)?
One year ago, you puchased 207 shares of ABC stock for $51.7
per share. During the year, you received a dividend of $6.83 per share.
Today, you sold all your shares for $60.64. What are the percentage return
on your investment?



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