Giraldos Bass and Pro Shops offer a common stock that pays an annual dividend of $2.00 a;share. The company has every intention of maintaining a constant dividend. How much are you;willing to pay for one share of this stock if you want to earn 15 percent return on your equity;investments?;Answer;A. $10.00;B. $13.33;C. $16.67;D. $18.88;Question 2;Helmkes International Mercenary Boutique offers a 15-year bond that pays a 4 percent coupon.;The bond is currently priced at $757.60 and has a par value of $1,000. Coupons are paid;quarterly. What is the yield to maturity for these bonds?;Answer;A. 5.00%;B. 6.55%;C. 9.10%;D. 10.39%;Question 3;Markels Skys The Limit Ceilings offers a 7 percent coupon bond with semi-annual payments;and a yield to maturity of 8.70 percent. The bond matures in 9 years. What is the market price of;a $1,000 face value bond?;Answer;A. $895.39;B. $965.18;C. $989.20;D. $1,058.11;Question 4;Prescilias Multicultural Enterprises offers a 9-year, zero coupon bond. The yield to maturity is;8.8 percent. What is the current market price of this $1,000 face value bond?;Answer;A. $422.66;B. $460.67;C. $835.56;D. $919.12;Question 5;Consider an asset that costs $1,600,000. It is depreciated straight-line to zero over its eight-year;tax life. What is the book value at the end of 6 years?;Answer;A. $200,000;B.$400,000;C.$600,000;D.$800,000;Question 6;The asset from the above problem can be sold at the end of six years for $200,000. If the;relevant tax rate is 20 percent, the after tax cash salvage from the sale of this asset is;Answer;$158,875;$180,000;$200,000 (since the ATCS can never exceed the sale price.);$240,000;Question 7;An investment project provides cash inflows of $1433 per year for 8 years. If the initial cost is;$5,000, the project payback period is;Answer;a. 3.11 years;b. 3.49 years;c. 3.86 years;d. 4.21 years;Question 9;For the cash flows of the above question, what is the Internal Rate of Return (IRR)?;Answer;A. 9.18%;B. 11.00%;C. 22.07%;D. 75.28%;Question 10;For the project data of the above two problems, the Profitability Index is;Answer;A. 0.93;B. 1.02;C. 1.58;D. 2.41;Question 11;For the project data of the above 3 problems, if there were 100,000 shares of stock outstanding;and your company proceeded with this project, what would be the expected increase in stock;price?;Answer;A. $0.06;B. $0.36;C. $0.42;D. $0.72;Question 12;Suppose you know a companys stock currently sells for $25 and the required return is 11%.;You also know that the total return on the stock is evenly divided between a capital gains yield;and a dividend yield. If it is the companys policy to always maintain a constant growth rate in its;dividends, what is the current dividend per share?;Answer;A. $1.14;B. $1.22;C. $1.30;D. $1.38;Question 13;The first comic book featuring Gitman was sold in 1962. In 2005, the estimated price for this;comic book in good condition was $500. This represented a return of 21.91 percent per year.;For this to be true, the comic book must have sold for how much originally?;Answer;A. 0.25 cents;B. A dime;C. 20 cents;D. About a dollar.
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