1. A company’s free cash flow next year is expected to be $2.3 million and the free cash flow is expected to grow forever at a rate of 5.4% per year. The company’s weighted average cost of capital is 9.4% per year and the market intrinsic value of its debt is $23.6 million. If the company has four million shares of common stock outstanding, what is the intrinsic value per share?

1) $9.84

2) $8.94

3) $8.48

4) $11.12

5) $10.32

2. A bond has a $1,000 par value, 20 years to maturity, and pays a coupon of 5.5% per year, annually. The bond is callable in ten years at $1,075. If the bond’s yield to maturity is 5.89% per year, what is its yield to call?

1) 5.87%

2) 6.68%

3) 6.43%

4) 6.57%

5) 6.11%