Finance 302 Final Exam Study Guide

# Finance 302 Final Exam Study Guide - Finance 302 Final Exam...

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Finance 302 Final Exam Study Guide Exam 2: 1. A set of projects where only one can be accepted are said to be ______________________________ 2. What is the difference between the IRR and the MIRR? Which one is considered to be more conservative? Why? 3. A portfolio’s risk can be divided into two parts. What are the two parts? Problems: 1. If \$780 is placed in an account that earns a nominal 4 percent return, compounded quarterly, what will it be worth in 8 years? 2. You deposit \$5,600 in a savings account that pays 8 percent interest, compounded annually. How much will your account be worth in 12 years? 3. You can earn 11 percent interest, compounded annually. How much must you deposit today to withdraw \$20,000 in 15 years? 4. Suppose you invested \$5,000 in stocks 10 years ago. If your account is now worth \$12,839.42, what rate of return did your stocks earn? 5. What is the present value of a 15-year ordinary annuity with annual payments of \$2,000, evaluated at a 12 percent interest rate? 6. What is the future value of a 15-year annuity due with annual payments of \$2000, evaluated at a 12% interest rate?

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Use the information below for problems 7-9 State Pi Rj 1 0.3 8% 2 0.5 12 3 0.2 15 7. Calculate the expected return for security j. 8. Calculate the standard deviation for security j. 9. Calculate the Coefficient of Variation (CV) for security j. For questions 10-14, use the following information: Your company is considering the following project. The costs and cash flows are listed below. Year Project Cash Flows 1 -\$1500 2 1000 3 675 4 700 5 500 The cost of capital is 12% 10. What is the project’s payback period? 11. What is the project’s discounted payback period?
12. What is the project’s NPV? 13. What is the project’s IRR? 14. What is the project’s MIRR? 15a. Calculate the required rate of return for Mars Inc.’s stock. The Mar’s beta is 1.2, the rate on a T-bill is 4 percent, the expected return on the market is 11.5 percent. 15b. Assume the expected rate of return for Mar’s Inc.’s stock is 16%. Would you purchase this stock? Why or why not? Exam 1: 1. Which of the following statements is most correct? a. One of the advantages of the corporate form of organization is that there is no double taxation. b. The partnership form or organization has easy transferability of ownership. c. One of the disadvantages of the sole proprietorship form of organization is that there is unlimited liability. d. Statements b and c are correct. e. None of the above is correct. 2.

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Finance 302 Final Exam Study Guide - Finance 302 Final Exam...

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