6.16.Find % Change of Bond Bill and Ted(24/24) a.If the YTM suddenly rises to 9 percent:(Show work): b.If the YTM suddenly falls to 5 percent: c. d. What does this problem tell you about the interest rate risk of longer-term bonds? 7.11.With a return of 8 percent on this stock, how much should you pay? (4/4) 7.12.Value a stock with two different required returns. Use the constant growth model.(12/12) a.Price @ required return of 12%: b.Price @ required return of 8%: c.What does a higher required return meanto the stock ? 6.16d: All else the same, the longer the maturity of a bond, the greater is its price sensitivity to changes in interest rates. 7.12c All else held constant, a higher required return means that the stock will sell for a lower price. Also, notice that the stock price is very sensitive to the required return. In this case, the required return fell by 1/3 but the stock price more than doubled. BUSN 379 DeVry Week 4 Homework Please complete the following exercises from Chapter 8 of your textbook and post them in the Dropbox. Chapter 8: 3, 4, 5, and 6 Chapter 7: 3, 4, 5, and 6 8.3 Which Project should be accepted A or B?(4/4) 8.4 Calculate AAR, the average net income divided by the average book value.(12/12) a.Average net income = b.Average book value = c.AAR = 8.5 Calculate IRR:(8/8) a.IRR = b.Should the project be accepted and why? . 8.6 Calculate NPV:the PV of the outflows minus by the PV of the inflows.(16/16) a.@ 9% required return. b.Should the project be accepted: c.@ 21% required return. d.Should the project be accepted:
BUSN 379 DeVry Week 5 Homework Please complete the following exercises from Chapter 11 of your textbook and post them in the Dropbox. Chapter 11: 4, 7, 17, and 29 BUSN 379 DeVry Week 6 Homework Please complete the following exercises from Chapters 12 and 13 of your textbook and post them in the Dropbox. Chapter 12: 3, 5, 6, and 15 Chapter 13: 1 BUSN 379 DeVry Week 7 Homework Please complete the following exercises from Chapter 17 of your textbook and post them in the Dropbox. Chapter 17: 6, 7, and 14 BUSN 379 DeVry Final Exam 1. (TCO 4) Which of the following is true regarding the evaluation of projects? 2. (TCO 4) Which of the following investment ranking methods does not consider the time value of money? 3. (TCO 3 and 4) You can ensure that an investment is expected to create value for 4. (TCO 3 and 4) What is the net present value of a project with the following cash flows, if the discount rate is 10 percent? 5. (TCO 4) Howard Company is considering a new project that will require an initial cash investment of $575,000. The project will produce no cash flows for the first three years. The projected cash flows for years 4 through 8 are $73,000, $112,000, $124,000, $136,000, and $145,000, respectively. How long will it take the firm to recover its initial investment in this project? 6. (TCO 4) The postponement of a project until conditions are more favorable: 7. (TCO 4) ___________, occurs when a firm cannot raise financing for a project under any circumstances. 8. (TCO 4) ABC Cameras is considering an investment that will have a cost of $10,000 and the following cash flows: $6,000 in year 1, $4,000 in year 2 and $3,000 in year 3. Assume the cost of capital is 10%. Which of the following is true regarding this investment? 9. (TCO 4) Assume Company X plans to invest $60,000 in industrial equipment. Using Tables 9.6 and 9.7 of your textbook (Page 277), which is the first year depreciation amount under MACRS? 10. (TCO 1 and 4) Assume a corporation has earnings before depreciation, and taxes of $100,000, depreciation of $40,000, and that it has a 30 percent tax bracket. What are the after-tax cash flows for the company? 11. (TCO 8) Which of the following statements is true regarding systematic risk? 12. (TCO 8) Which statement is true regarding risk? 13. (TCO 8) The stock of Chocolate Galore is expected to produce the following returns, given the various states of the economy. What is the expected return on this stock? 14. (TCO 8) You own a portfolio that consists of $8,000 in stock A, $4,600 in stock B, $13,000 in stock C, and $5,500 in stock D. What is the portfolio weight of stock D?