1) XYZs bonds have 3 years remaining to maturity. The bonds have a face value of 10%. They pay interest annually and have 8% coupon rate. What is their current yield?

2) Diesel company issued bonds with 12% coupon rate, semi annual coupon, $1,000 par value. Bonds mature in 40 years and are callable 5 years from now at $1120. Bonds are sold today at a price of $1300, and the yield curve is ownward sloping. What type of yield will you use as a most likely scenario (yield to call or YTM)? Write a formula; insert numbers (no calculation required). Is the YTM (or yield to call) higher or lower than the coupon rate?

3) Motors Co stock has a required rate of return of 11.50% and it sells for 25$. Dividend is expected to grow at constant rate of 7%. What is the last dividend paid?

4) Last month, Lloyd's Systems analyzed the project whose cash flows are shown below. It is 100% debt financed. The tax rate is 25%. The yield on company`s bond is 16% Year 0 1 2 3 Cash flows -$1,100 $460 $480 $510 Calculate the projects NPV, Profitability ratio and decide whether you accept it or not. If the payback period acceptable for a company in 3 years, would you accept a project, being based on discounted cash flows?

5) Is it true? Explain! If our current ratio is greater than 1,5, then borrowing on a short-term basis and using the funds to build up our cash would cause the current ratio to increase.