Q3: Calculating Payback. Global Toys Inc., imposes a payback cut off of three years for its international investment projects. If
accept either of them?
Year
0
1
2
3
Cash Flow (A)
-55,000
19,000
27,000
24,000
Cum. Cash Flow
-55,000
-36,000
-9,000
15,000
9

Q3: Calculating Cost of Equity. Stock in CDB Industires has a beta of .90. The market risk premium is 7 percent, and T-bills are c
percent annual rate indefinitely. If the stock sells for $47 per share, what is your best estimate of CDB's cost of equity?

Q4: Portfolio Expected Return. You have $10,000 to invest in a stock portfolio. Your choices are Stock X with an expected retur
portfolio with an expected return of 12.4 percent, how much money will you invest in Stock X? In Stock Y?
0.124=0.14x+0.11(1-x)

Q18: Calculating Future Values. You have just made your first $5,000 contribution to your individual retirement account. Assum
and make no additional contributions, what will your account be worth when you retire in 45 years? What is you wait 10 years
inv

Q16: Interest Rate Risk. Both Bond Bill and Bond Ted have 7 perscent coupons, make semiannual payments, and are priced at
20 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage chage in price of Bond Bill? Of Bond Te
th

Q8: Calculating OFC. Hammett, Inc. has sales of $34,630, costs of $10,340, depreciation expense of $2,520, and interest expen
tax rate is 35 percent, what is the operating cash flow, or OFC?
34630 Sales
-10340 COGS
24290
-2520 Depreciation
21770 EBIT
-175

Q6: Calculating Net Float. Each business day, on average, a company writes checks totaling $19,500 to pay its suppliers. The us
from its customers each day, in the form of checks, totaling $37,200. The cash from the payments is available to the firm after