THPS 3 - PMBA 8135 Take Home Problem Set 3 Fall 2010...

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PMBA 8135 Take Home Problem Set 3 Fall 2010 Compute an answer to every question/problem on this problem set. Fill in your answers only on the answer sheet. Your completed answer sheet is due at the beginning of class on Saturday, November 13. All work on this problem set is to be yours alone. No cooperation of any sort is allowed. This problem set is governed by the GSU honor code. If you have any questions concerning the problem set, attend the chat session or send me questions via GSU email. NOTE : All questions are equally weighted. PART I: MULTIPLE CHOICE – Choose the letter of the most correct answer for each question. Record only one answer per question. 1. The stock valuation model that determines the current stock price by dividing the next annual dividend amount by the excess of the discount rate less the dividend growth rate is called the _____ model. a. zero growth b. dividend growth c. capital pricing d. earnings capitalization e. differential growth 2. Next year's annual dividend divided by the current stock price is called the: a. yield to maturity. b. total yield. c. dividend yield. d. capital gains yield. e. earnings yield. 3. The rate at which a stock's price is expected to appreciate (or depreciate) is called the _____ yield. a. current b. total c. dividend d. capital gains e. earnings 4. Assume that you have the following information on project A: (i) it will yield cash flows of $935 per year forever; (ii) the IRR is 12%; (iii) the required rate of return is 10.35%.What is the NPV of this project? a. $935,000,000 b. $1,282.45 c. $1,242.15 d. $1,397.65 e. Not enough information is provided 5. A cost that has already been paid, or the liability to pay has already been incurred, is a(n): a. salvage value expense. b. net working capital expense. c. sunk cost. d. opportunity cost. e. erosion cost.
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6. The most valuable investment given up if an alternative investment is chosen is a(n): A. salvage value expense. B. net working capital expense. C. sunk cost. D. opportunity cost. E. erosion cost.
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This note was uploaded on 11/07/2010 for the course FIN 8040 taught by Professor Patel during the Spring '10 term at Georgia State University, Atlanta.

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THPS 3 - PMBA 8135 Take Home Problem Set 3 Fall 2010...

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