exam1b.ch1ch2ch2Ach5partial (1)

Exam1b.ch1ch2ch2Ach5 - Name Webct User ID University of Houston C T Bauer College of Business Principles of Financial Management Finance 3332

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Name __________________________________ Webct User ID __________________________________ University of Houston C. T. Bauer College of Business Principles of Financial Management Finance 3332 Spring, 2009 Exam 1 B To receive full credit, show all work—equations in variable form, equations with numbers plugged in—and clearly indicate your answer. Financial functions may be used ONLY for finding annuity factors, and all inputs must be shown. Round answers decimals to 4 places where applicable Point values are in parentheses. 1. What is the value of an investment which is expected to pay $10,000 per year for 14 years, if the investor’s required  rate of return is 8 percent? (10) 2. The earnings of Pheasant Corporation have grown from $5 per share to $8 per share over the past 8 years. What has  been the annual rate of growth in the firm’s earnings? (8) 3. If Jerry saves $12,000 per year for 14 years, how much will he have saved if his account earns 4 percent per year? (10) 4. How much must I deposit today, if I want to have $10,000 in my account in 8 years, and the account earns an interest  rate of 5 percent compounded annually? (8) 5. A corporate bond is yielding ten percent, and an equivalent risk municipal bond yields seven percent. Which bond is  preferred by an investor who has a twenty percent marginal tax rate? Justify your answer with calculations.  (6) 6. A put option gives the holder, or owner, of the option, the right to _________ a specified asset at the specified  exercise price on or before a specified expiration date. (4) Taxable Income($) Tax Calculation
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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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Exam1b.ch1ch2ch2Ach5 - Name Webct User ID University of Houston C T Bauer College of Business Principles of Financial Management Finance 3332

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