Quiz

1.
What
is the future value of $1,400, placed in a savings account for 4 years if the
account pays 0.08, compounded quarterly?(Answer should be correct to two
decimal places).

2.
You
brother, who is 6 years old, just received a trust that will be worth $24,000
when he is 21 years old. If the fund earns 0.08 interest compounded annually,
what is the value of the fund today?

3.
If
you were to borrow $8,100 over five years at 0.12 compounded monthly, what
would be your monthly payment?

4.
Your
uncle promises to give you $700 per quarter for the next five years. How much
is his promise worth right now of the interest rate is 0.10 compounded
quarterly?

5.
A
stock has an expected return of 0.09 and a variance of 0.23. What is its
coefficient of variation?

6.
Use
the following information to calculate you companys expected return.

State Probability Return

Boom 20% 0.38
Normal 60% 0.10
Recession 20% -0.16

7.
You
have invested in stocks J. and M. From the following information, determine the
beta for your portfolio.

Expected Amount of

Return Investment Beta

Stock J 0.11 $100,000 1.17
Stock M 0.10 $300,000 0.86

8.
Frazier
Manufacturing paid a dividend last year of $2, which is expected to grow at a
constant rate of 5%. Frazier has a beta of 1.3. If the market is returning 11%
and the risk-free rate is 4%, calculate the value of Fraziers stock.

a.
$25.93
b.
$31.33
c.
$38.53
d.
$41.63
e.

9.
You
have invested 30 percent of your portfolio in Jacob, Inc. 40 percent in Bella
Co. and 30 percent in Edward Resources. What is the expected return of your
portfolio if Jacob, Bella, and Edward have expected returns of 0.06, and 0.10,
respectfully?

10. The covariance of the returns
between Willow Stock and Sky Diamond Stock is 0.0870. The variance of Willow is
0.2480, and the variance of sky Diamond is 0.1010. What is the correlation
coefficient between the returns of the two stocks?

11. A project has the following cash
flows:

0 1 2 3

($500) $160.00 $200 $310.00

What
is the propers NPV if the interest rate is $ 6%?

14. An investment project an initial outlay of $100,000 and is
expected to generate annual cash inflows of $28,000 for the next 5 years.
(Round to the nearest tenth of the percentage). Determine the (internal rate of
return) IRR for the project.
Choose:
12
3.6
12.6
12.4

16. Christopher Electronics bought new machinery for $5,105,000.
This is expected to result in additional cash flows of $1,215,000 million over
the next 7 years. What is the payback period for this project? Their acceptance
period is five years.

17. AMP Inc. has invested 2165800 on equipment. The firm uses
payback period criteria of not accepting any project that has more than four
years to recover cost. The company anticipates cash flows of $436,386;
$512,178; $563,775; $764,997; $816,500 and $825,375 over the next 6 years. What
is the payback period?
Quiz1.
What
is the future value of $1,400, placed in a savings account for 4 years if the
account pays 0.08, compounded quarterly?(Answer should be correct to two
decimal places).2.
You
brother, who is 6 years old, just received a trust that will be worth $24,000
when he is 21 years old. If the fund earns 0.08 interest compounded annually,
what is the value of the fund today?3.
If
you were to borrow $8,100 over five years at 0.12 compounded monthly, what
would be your monthly payment?4.
Your
uncle promises to give you $700 per quarter for the next five years. How much
is his promise worth right now of the interest rate is 0.10 compounded
quarterly?5.
A
stock has an expected return of 0.09 and a variance of 0.23. What is its
coefficient of variation?6.
Use
the following information to calculate you companys expected return.State Probability ReturnBoom 20% 0.38Normal 60% 0.10Recession 20% -0.167.
You
have invested in stocks J. and M. From the following information, determine the
beta for your portfolio.Expected Amount ofReturn Investment BetaStock J 0.11 $100,000 1.17Stock M 0.10 $300,000 0.868.
Frazier
Manufacturing paid a dividend last year of $2, which is expected to grow at a
constant rate of 5%. Frazier has a beta of 1.3. If the market is returning 11%
and the risk-free rate is 4%, calculate the value of Fraziers stock. a.
$25.93b.
$31.33c.
$38.53d.
$41.63e.
9.
You
have invested 30 percent of your portfolio in Jacob, Inc. 40 percent in Bella
Co. and 30 percent in Edward Resources. What is the expected return of your
portfolio if Jacob, Bella, and Edward have expected returns of 0.06, and 0.10,
respectfully?10. The covariance of the returns
between Willow Stock and Sky Diamond Stock is 0.0870. The variance of Willow is
0.2480, and the variance of sky Diamond is 0.1010. What is the correlation
coefficient between the returns of the two stocks?11. A project has the following cash
flows:0 1 2 3($500) $160.00 $200 $310.00What
is the propers NPV if the interest rate is $ 6%?14. An investment project an initial outlay of $100,000 and is
expected to generate annual cash inflows of $28,000 for the next 5 years.
(Round to the nearest tenth of the percentage). Determine the (internal rate of
return) IRR for the project.Choose:123.612.612.4 16. Christopher Electronics bought new machinery for $5,105,000.
This is expected to result in additional cash flows of $1,215,000 million over
the next 7 years. What is the payback period for this project? Their acceptance
period is five years. 17. AMP Inc. has invested 2165800 on equipment. The firm uses
payback period criteria of not accepting any project that has more than four
years to recover cost. The company anticipates cash flows of $436,386;
$512,178; $563,775; $764,997; $816,500 and $825,375 over the next 6 years. What
is the payback period?