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exam2b.ch5ch5A

# exam2b.ch5ch5A - Name Webct User ID University of Houston C...

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Name __________________________________ Webct User ID __________________________________ University of Houston C. T. Bauer College of Business Finance 3332 Principles of Financial Management Summer, 2007 Exam 2B To receive full credit, show all work—equations in variable form, equations with numbers plugged in—and clearly indicate your answer. Calculator financial functions may be used ONLY for finding annuity factors. Interest rates should be carried to a minimum of four decimal places. 1. The dividends of Laverne Corporation have grown from \$0.10 per share to \$0.25 per share over the past 8 years. What  has been the annual rate of growth in the firm’s dividends to the nearest percent? (7) 2. We plan to buy a tractor that costs \$40,000 for the ranch. If we save for 5 years, how much must we save each year if  our account earns 4 percent per year? (8) 3. Over the next 8 years, Clayton plans to save for retirement. He wants to be able to withdraw \$90,000 per year for 25  years during his retirement years. If his account earns an annual return 6 percent, how much must does he need in his  account when he retires? (8) 4. What is the value of an investment which pays an infinite cash flow of \$20 per year to an investor who requires a 8  percent return? (6) 5. What is the value of the following cash flow stream if the investor requires a 7 percent return? (10)

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exam2b.ch5ch5A - Name Webct User ID University of Houston C...

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