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exam2b.ch5ch5Ach6ch7ch8 - Name PeopleSoft University of...

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Name __________________________________ PeopleSoft # __________________________________ University of Houston C. T. Bauer College of Business Finance 3332 Principles of Financial Management Summer 6 week-2 nd , 2010 Exam 2B Point values are in parentheses. To receive full credit: Show all work—equations in variable form & equations with numbers plugged in Clearly indicate your answer Financial functions may be used, but all inputs must be clearly shown Carry all decimals, rounding only final answer Final answer decimal places should be rounded to four places (two in percent form) o Either form is acceptable Currency answers rounded to the nearest cent, where applicable Include applicable units on answers 1. What is the effective rate of interest for a nominal rate of 16 percent, compounded semi-annually? (4) 2. What is the market value of a $1000 par bond with a six percent coupon which is paid semi-annually, if its yield to maturity is eight percent and it matures in 22 years? (6) 3. What is the yield to call on a $1000 par bond, with a 7 percent coupon, maturing in 30 years, if it is selling for $1054.81 and is callable at 115 in 8 years? (6) 4. Tiger Company’s common stock is expected to pay a dividend next year of $2.00 per share. What is the value per share of the firm’s common stock if earnings and dividends are expected to grow at a rate of 6 percent for the foreseeable future, and investors require a 13 percent return? (4) 5. Wayne borrowed $120,000 at a nominal annual rate of 3 percent for 20 years. How much will be his monthly payments? (8) 6. If I deposit $6000 in my account which earns an interest rate of 5 percent compounded continuously, how much will I have in my account in 8 years? (4)
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