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##### 4. One year ago, you purchased a 5 percent coupon...

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4. One year ago, you purchased a 5 percent coupon bond with a face value of $1,000 when it was selling for 101.2 percent of par. Today, you sold this bond for 99.8 percent of par. What is your total dollar return on this investment? a. $36 b. $60 c. $64 d. $74 e. $82 6. Fig Newton Industries is considering a project and has developed the following estimates: unit sales = 7,300, price per unit = $149, variable cost per unit = $91, fixed costs = $216,400. The depreciation is $94,700 a year and the tax rate is 40 percent. What effect would an increase of $1 in the selling price have on the operating cash flow? a. $4,380 b. $4,823 c. $5,316 d. $5,448 e. $7,300 7. The Shoe Box is considering adding a new line of winter footwear to its product lineup. Which of the following are relevant cash flows for this project?I. Decreased revenue from products currently being offered if this new footwear is added to the lineupII. Revenue from the new line of footwearIII. Money spent to date looking for a new product line to add to the store's offeringsIV. Cost of new counters to display the new line of footwear a. I and IV only b. II and IV only c. II and III only d. I, II, and IV only e. II, III, and IV only 8. To accurately reflect the costs associated with a project, you should exclude interest expenses in the computation of operating cash flows. a. True b. False 11. A cost-cutting project will decrease costs by $58,500 a year. The annual depreciation on the project's fixed assets will be $10,300 and the tax rate is 34 percent. What is the amount of the change in the firm's operating cash flow resulting from this project? a. $24,552 b. $26,791 c. $25,805 d. $38,610 e. $42,112 12. Custom Tailored Shirts is a specialty retailer offering T-shirts, sweatshirts, and caps. Its most recent annual sales consisted of $14,000 of T-shirts, $11,000 of sweatshirts, and $1,300 of caps. The company is adding polo shirts to the lineup and projects that this addition will result in sales next year of $14,000 of T-shirts, $8,000 of sweatshirts, $7,800 of Polo shirts, and $1,300 of caps. What sales amount should be used when evaluating the Polo shirt project? a. $0 b. $4,800 c. $4,900 d. $5,000 e. $9,100 13. Which of the following should be included in the analysis of a proposed investment?I. Financing costsII. Opportunity costsIII. Sunk costsIV. Side effects (erosion) a. I only b. II only c. II and IV only d. I, II, and IV only e. I, II, III, and IV 15. One year ago, LaTresa purchased 600 shares of Outland Co. stock for $3,600. The stock does not pay any regular dividends but it did pay a special dividend of $0.30 a share last week. This morning, she sold her shares for $7.25 a share. What was the total return on this investment? a. 18.00 percent b. 20.83 percent c. 22.50 percent d. 25.83 percent e. 28.24 percent 20. One year ago, Peyton purchased 3,600 shares of Broncos stock for $101,124. Today, he sold those shares for $26.60 a share. What is the total return on this investment if the dividend yield is 1.9 percent? a. -3.98 percent b. -3.40 percent c. -2.29 percent d. 1.10 percent e. 3.40 percent

Paper#10155 | Written in 18-Jul-2015

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