1. According to the text, the primary goal for a firms financial managers is to:
a.
b.
c.
d.
e.
Maximize the firms reported net income per share of common stock.
Minimize the price of the companys outstanding bonds.
Maximize dividends paid to stockholders
FI3300 Fall 2007
Exam Two
1) You are considering buying a new car. The sticker price is $20,000 and you have $2,000 to put toward a
down payment. If you can negotiate a nominal annual interest rate of 12 percent and you wish to pay for
the car over a 5-ye
Chapter 2
2-4
A money market transaction occurs in the financial market in which funds are borrowed
or loaned for short periods (less than one year). A capital market transaction occurs in
the financial market in which stocks and intermediateor long-term
Questions
7-4
The price of the bond will fall and its YTM will rise if interest rates rise. If the bond still has a
long term to maturity, its YTM will reflect long-term rates. Of course, the bonds price will be
less affected by a change in interest rates
1. You are evaluating the preferred stock of xyz corp. the par value of the stock is $92
and the annual dividend rate is 12.5% the required rate of return is 13.2% currently,
the preferred stock is selling for $89 per share.
a.
b.
c.
d.
what is the value
1. FIND THE VALUE OF A BOND WITH A PAR VALUE OF $1,000 AND A COUPON
RATE OF 13% , IF THE BOND HAS 23 YEARS TO MATURITY AND A REQUIRED
RATE OF RETURN OF 11%. INTEREST IS PAID SEMI-ANNUALLY.
a. HOW IS THE BOND PRICED, IF THE PRICE IS $1,148.2723? WHAT IS YO
Part A
1. What will be the value of $4,500 deposited in an account paying an interest of 13% per
year, compounded semi-annually, nine and a half years from the date of deposit?
a. $1,360.0973
b. $14,888.6411
c. $419.2009
d. $343.6159
e. $14,370.0317
2. Ho
Finance Study Guide
1. Hayes Corporation has $370 million of common equity (book value), with 8 million
shares of common stock outstanding. If Hayes market value added (MVA) is $160
million, what is the company per share stock price?
a. $46,2500
b. $26,50
Kathryn Bernardini
Finance Extra Credit
Dr. Lucky Narain
19 April 2016
Summary of The New Normal
The article, The New Normal: 4 job changes by time youre 32, by Heather Long
published April 12th 2016 is about how a new study has shown that most college gr
1. Which of the following statements is most correct concerning a project with normal cash flows
(i.e., a cash outflow in Year 0 followed by cash inflows in all subsequent years)?
a. If the NPV of a project is positive then the payback period rule will al
FI3300 Fall 2006
Exam Two
Solutions
5) A $1,000 par value bond has coupon rate of 6% and the coupon is paid semi-annually. The bond
matures in 40 years and has a required rate of return of 10%. Compute the current price of this bond.
FV = 1000, PMT = (100
Chapter 3 assignment solution
3-2
EBIT-interest tax=NI
So,
6-I-(6-I)x0.4=3, so I=1
3-3
Similar as in 3-1, so
7.5-DA-2-(75-DA-2)x0.4=1.8
Solve equation,
DA=2.5
3-4
Div= NI changes in RE = 50-(810-780) =20
3-7
A: issuing new common stock will immediately br
Chapter 4 assignment solution
4-2
1/(1-DR)=2.4, so 2.4-2.4xDR=1, so
DR=0.5833
4-3
ROA=Profit margin x asset turnover, so 0.1=0.02x asset turnover, so asset
turnover=0.1/0.02=5
ROE=ROAx Equity Multiplier, so 0.15=0.1xEM, so EM=0.15/0.1=1.5
4-5
BV=20, MV/BV
121
a. Equipment
NOWCInvestment
Initialinvestmentoutlay
$9,000,000
3,000,000
$12,000,000
b. No, last years $50,000 expenditure is considered a sunk cost and does not represent an
incrementalcashflow.Hence,itshouldnotbeincludedintheanalysis.
c. Thepotentia
Finance Study Guide
1. Hayes Corporation has $370 million of common equity (book value), with 8 million
shares of common stock outstanding. If Hayes market value added (MVA) is $160
million, what is the company per share stock price?
a. $46,2500
b. $26,50