1. What is the future value of $1,400, placed in a savings account for 4 years if the account pays 0.08, compounded quarterly?(Answer should be correct to two decimal places).
2. You brother, who is 6 years old, just received a trust that will be worth $24,000 when he is 21 years old. If the fund earns 0.08 interest compounded annually, what is the value of the fund today?
3. If you were to borrow $8,100 over five years at 0.12 compounded monthly, what would be your monthly payment?
4. Your uncle promises to give you $700 per quarter for the next five years. How much is his promise worth right now of the interest rate is 0.10 compounded quarterly?
5. A stock has an expected return of 0.09 and a variance of 0.23. What is its coefficient of variation?
6. Use the following information to calculate you company's expected return.
State Probability Return
Boom 20% 0.38
Normal 60% 0.10
Recession 20% -0.16
7. You have invested in stocks J. and M. From the following information, determine the beta for your portfolio.
Expected Amount of
Return Investment Beta
Stock J 0.11 $100,000 1.17
Stock M 0.10 $300,000 0.86
8. Frazier Manufacturing paid a dividend last year of $2, which is expected to grow at a constant rate of 5%. Frazier has a beta of 1.3. If the market is returning 11% and the risk-free rate is 4%, calculate the value of Frazier's stock.
a. $25.93
b. $31.33
c. $38.53
d. $41.63
e.
9. You have invested 30 percent of your portfolio in Jacob, Inc. 40 percent in Bella Co. and 30 percent in Edward Resources. What is the expected return of your portfolio if Jacob, Bella, and Edward have expected returns of 0.06, and 0.10, respectfully?
10. The covariance of the returns between Willow Stock and Sky Diamond Stock is 0.0870. The variance of Willow is 0.2480, and the variance of sky Diamond is 0.1010. What is the correlation coefficient between the returns of the two stocks?
11. A project has the following cash flows:
0 1 2 3
($500) $160.00 $200 $310.00
What is the proper's NPV if the interest rate is $ 6%?
14. An investment project an initial outlay of $100,000 and is expected to generate annual cash inflows of $28,000 for the next 5 years. (Round to the nearest tenth of the percentage). Determine the (internal rate of return) IRR for the project.
Choose:
12
3.6
12.6
12.4
16. Christopher Electronics bought new machinery for $5,105,000. This is expected to result in additional cash flows of $1,215,000 million over the next 7 years. What is the payback period for this project? Their acceptance period is five years.
17. AMP Inc. has invested 2165800 on equipment. The firm uses payback period criteria of not accepting any project that has more than four years to recover cost. The company anticipates cash flows of $436,386; $512,178; $563,775; $764,997; $816,500 and $825,375 over the next 6 years. What is the payback period?