exam4b.ch7ch8ch9ch10 - Name _ Webct ID _ University of...

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Name _________________________________ Webct ID _________________________________ University of Houston Bauer College of Business Finance 3332 Principles of Financial Management Exam 4B: Summer, 2007 To receive full credit, show all work—equations in variable form, equations with numbers plugged in—and clearly indicate your answer. Calculator financial function inputs must also be shown. Interest rates should be carried to a minimum of four decimal places. Point values are in parentheses. 1. What is the value of a $1000 par, zero coupon bond which matures in 8 years and has a yield to maturity of 11  percent? (4) 2. What is the  yield to call  on Kraver’s 7s25 $1000 par bond, which sells for $1049.42. The bonds are callable  beginning in 5 years at 110. (7) 3. What is the value of a $1000 par bond paying a 6 percent semi-annual coupon and maturing in 14 years if investors  require an 8 percent return? (6) 4. What is the price of a $10,000, 40 day T-bill which sold at a discount from face of 4.5 percent? (5) 5. Determine the value of Kraver’s $6 cumulative preferred stock, $100 par, to an investor who requires a 5 percent  return. (3) 6. A project has an installed cost of $500,000. The project replaces an existing piece of equipment that has an estimated  salvage value of $8000 and has a book value of $12,000. The firm’s marginal tax rate is 40 percent, and a return of 14  percent is required on projects of this type. What is the  Net Investment  for this project? (6) Use the following information to answer questions 7 – 9. An investment project requires a net investment of $200,000. The project is expected to generate annual net cash flows of 
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This note was uploaded on 02/13/2011 for the course FINA 3332 taught by Professor Darlachisholm during the Spring '08 term at University of Houston.

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exam4b.ch7ch8ch9ch10 - Name _ Webct ID _ University of...

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