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Question;Question 1ABC is reviewing a project that will cost $1,431.The project will produce cash flows $210 at the end of each year for the first two years and $772 at the end of each year for the next two years. What is the profitability index? Assume interest rate is 4%.a. 1.56b. 0.95c. 1.22d. 2.56Question 2Suppose an investment offers to double your money in 39 years. What annual rate of return are you being offered if interest is compounded semi-annually?a. 1.79%b. 1.56%c. 0.98%d. 0.89%Question 3How many years will it take to quadruple (i.e. 4 times) your money at 9% compounded quarterly?a. 7.2424b. 15.5759c. 5.6478d. 3.3168Question 4A bond is currently selling for $1,087. If the yield to maturity is 10%, the coupon rate will be:a. less than 10%.b. equal than 10%.c. more than 10%.d. None aboveQuestion 5Suppose the real rate is 9.83% and the inflation rate is 4.65%. Solve for the nominal rate.a. 11.32%b. 12.87%c. 14.93%d. 21.74%Question 6An investment is acceptable if the profitability index (PI) of the investment is:a. less than the net present value (NPV).b. less than one.c. greater than one.d. greater than the internal rate of return (IRR).e. greater than a pre-specified rate of return.Question 7A 8.9 percent $1,000 bond matures in 17 years, pays interest semiannually, and has a yield to maturity of 16.02 percent. What is the current market price of the bond?a. $587.92b. $456.23c. $143.24d. $693.22Question 8Uptown Insurance offers an annuity due with semi-annual payments for 19 years at 4.9 percent interest. The annuity costs $176,239 today. What is the amount of each annuity payment?a. $7,008.06b. $5,670.26c. $8,300.23d. $4,607.98Question 9ABC?s last dividend paid was $4.4, its required return is 13%, its growth rate is 6%, and its growth rate is expected to be constant in the future. What is ABC's expected stock price in 19 years?a. $104.37b. $201.59c. $98.15d. $120.31Question 10Given the following cash flows, calculate the payback period:Year CF0 -9211 3682 2533 2914 784a. 3.0115b. 3c. 2.0125d. 4.5209Question 11A stock just paid a dividend of D0 = $3.4. The required rate of return is rs = 15.8%, and the constant growth rate is g = 3%. What is the current stock price?a. $35.76b. $24.469c. $3.45d. $27.359Question 12Suppose that today's stock price is $49.8. If the required rate on equity is 18.6% and the growth rate is 7.9%, compute the expected dividend (i.e. compute D1)a. $7.2447b. $10.6483c. $5.3286d. $2.5643Question 13The common stock of ABC Industries is valued at $49 a share. The company increases their dividend by 3.1 percent annually and expects their next dividend to be $1.84. What is the required rate of return on this stock?a. 2.82%b. 3.61%c. 4.87%d. 6.86%Question 14The ABC Co. has $1,000 face value stock outstanding with a market price of $937.6. The stock pays interest annually, matures in 9 years, and has a yield to maturity of 10.7 percent. What is the current yield?a. 5.11%b. 10.22%c. 7.34%d. 14.94%Question 15The principal amount of a bond that is repaid at the end of term is called the par value or the:a. call premiumb. perpetuity valuec. face valued. back-end valuee. coupon valueQuestion 16What is the effective rate of 18% compounded monthly?a. 26.97%b. 13.56%c. 17.46%d. 19.56%Question 17A project has the following cash flows. What is the internal rate of return?Year 0 1 2 3Cash flow -$121,000 68,150 $42,200 $39,100a. 12.71%b. 14.39%c. 13.47%d. 13.85%e. 14.82%Question 18A cost that has already been incurred and cannot be recouped is called as a(n):a. sunk costb. financial costc. opportunity costd. side coste. relevant costQuestion 19ABC Corp. just paid a dividend of $2.4 per share at the end of the year. The stock has a required rate of return is 18%. The dividend is expected to grow at 6.9%. What is dividend at time = 8? (solve for D8?)a. $7.667b. $3.175c. $6.451d. $4.093Question 20What is the net present value of the following cash flows? Assume an interest rate of 3.5%Year CF0 -$11,8951 $7,7222 $5,6873 $5,120a. $5,492.69b. $17,387.92c. $6,247.34d. $8,235.81Question 21A bond that sells for less than face value is called as:a. discount bondb. premium bondc. par value bondd. debenturee. perpetuity

Paper#50375 | Written in 18-Jul-2015

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