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Calculate the NPV of the following project cash flow using a discount rate of 7%: Yr 0 = –$1,000; Yr 1 = –$80; Yr 2 = +$100; Yr 3 = +$400; Yr 4 = +$500; Yr 5 = +$500

How much would you pay for a share of ABC Corporation stock today if the dividend in one year will be $3 per share, your required return on equity investments is 10%, and the stock is expected to be worth $90 one year from now?

What is the payback period of a $16,000 investment with the following cash flows?             Year                              1                2                3                4                5                       Cash Flow            +$3,000      +$4,000      +$5,000      +$8,000      +$9,000

What is the payback period of a $16,000 investment with the following cash flows?        Year                1              2              3              4              5    Cash Flow     $3,000       $4,000     $5,000    $6,000     $7,000

How much would you pay today for a stock that is expected to make a $2 dividend in one year if the expected dividend growth rate is 5% and you require an 8% return on your investment?

The following two bonds (A and B) make semi-annual payments. They are both identical, except for the coupon rate. What is the price of bond B?  Note: find bond A’s missing yield to maturity (YTM) first, use it for bond B’s YTM, then find bond B’s price. All variables have to be entered in half-year terms! Do not round you intermediate answers.                                                                         Bond A           Bond B                         Face Value                       $1,000             $1,000                         Coupon Rate as APR          7%                 5%                         Years to maturity                 30                  30                         Price                           $1,200.00                     ?

Which of the following government issued bonds are bonds for which the interest rate (i.e. the coupon rate) stays the same but for which the principal is adjusted for inflation?

The financial manager should rely on the profitability index, rather than the IRR for project selections when: 

Given the following information and assuming straight-line depreciation to zero, what is the profitability index for this project? Initial investment = $75,000; life = 5 years; operating cash flow = $20,000 per year; salvage value = $10,000 in year 5; tax rate = 35%; discount rate = 10%.

Llano’s stock is currently selling for $40.00. The expected dividend one year from now is $2 and the required return is 11%. What is this firm’s dividend growth rate assuming the constant dividend growth model is appropriate?