Chapter 8
3. Calculating Payback. Global Toys Inc., imposes a payback cutoff of three years for its
international investment projects. If the company has the following two projects available,
should it accept either of them?
Year
0
1
2
3
4
Cash Flow (A)
$
Chapter 11
4. Portfolio Expected Return. You have $10,000 to invest in a stock portfolio. Your choices are Stock X with
an expected return of 14 percent and Stock Y with an expected return of 11 percent. If your goal is to
create a portfolio with an expec
Chapter 6
16. Both Bond Bill and Bond Ted have 7 percent coupons, make semiannual payments, and are priced at
par value. Bond Bill has 3 years to maturity, whereas Bond Ted has 20 years to maturity. If interest rates
suddenly rise by 2 percent, what is th
Chapter 4
8. Calculating the Number of Periods. Calculating Rates of Return. In 2011, an 1880-O Morgan
silver dollar sold for $13,113. What was the rate of return on this investment?
FV=PV(1+r)^t
r=(FV/PV)^1/t-1
r=(13,113/1)^1/131-1
r=0.075060339
r=7.51%
Chapter 2 Questions
8. Hammett, Inc., has sales of $34,630, costs of $10,340, depreciation expense of $2,520, and interest
expense of $1,750. If the tax rate is 35 percent, what is the operating cash flow, or OCF?
Operating cash flow $ 17283
Sales - Cost