A bond has a 15-year maturity, a 7.25% semiannual coupon, and a par = $1,000. The yield to maturity (r_d) is 6.20%, and semiannual compounding. What is the bond’s price?

a.   $1,047.91

b.   $1,074.50

c.    $1,101.58

d.   $1,129.21

A project has an initial capital investment of $420,000, and a four-year life, at the end of which it will be fully depreciated to zero. The forecasted incremental net income after tax from the project is $14,200, $18,600, $16,300, and $20,000, respectively, for each of the next four years. What is the average accounting return (AAR) for this project?

• A. 4.1%
• B. 8.2%
• C. 9.9%
• D. 16.4%

Your firm is considering a project with a four-year life and an initial cost of $87,000. The discount rate for the project is 15 percent. The firm expects to sell 1,800 units a year. The cash flow per unit is $19. The firm will have the option to abandon this project after two years at which time they expect they could sell the project for $40,000. At what level of sales should the firm be willing to abandon this project?
A. 1,295 units
B. 1,361 units
C. 1,540 units
D. 1,565 units

An $8000 loan is to be amortized with equal monthly payments over a 2 year

period at j (12) = 8 %. Find the outstanding principal after 7 months and split the

8 th payment into principal and interest portions.

outstanding principal after 7 months is?

the principal in the 8 th payment is?

the interest in the 8 th payment is?

Jamal and Demetrius are both 25 and plan to invest $5000 each year for the next 40 years for retirement. Jamal plans to invest in the Vanguard Total U.S. Stock Market Fund which he thinks has a "gross" expected annualized return of 8.00%. However, its "net" expense ratio is 7.95% as Vanguard charges a 0.05% expense ratio. Demetrius, by contrast, has chosen an actively-managed fund which also has a "gross" expected annualized return of 8.00%. However, the XYZ Corporation that runs the fund charges a typical 0.75% annual expense ratio so the "net" expected return is 7.25%. How much more is Jamal "expected" to have after 40 years of investing than Demetrius?

The owner of a bicycle repair shop forecasts revenues of $160,000 a year. Variable costs will be $50,000, and rental costs for the shop are $30,000 a year. Depreciation on the repair tools will be $10,000.

a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%.

1. Dollars in minus dollars out.
2. Adjusted accounting profits.
3. Add back depreciation tax shield.

b. Calculate the operating cash flow for the repair shop using the three methods given below:

1. Dollars in minus dollars out.
2. Adjusted accounting profits.
3. Add back depreciation tax shield.

In 2019, a year in which the firm’s revenue increased, the firm’s operating margin increased, but the firm’s net margin decreased. Based on this information, what can you say about the firm’s performance in 2019?

Due to a recession, expected inflation this year is only 3.75%. However, the inflation rate in Year 2 and thereafter is expected to be constant at some level above 3.75%. Assume that the expectations theory holds and the real risk-free rate (r*) is 3.5%. If the yield on 3-year Treasury bonds equals the 1-year yield plus 1.5%, what inflation rate is expected after Year 1? Round your answer to two decimal places.

We are evaluating a project that costs $1,675,000, has a six year life, and has no salvage value. Assume that depreciation is straight line to zero over the life of the project. Sales are projected as 91,000 units per year, price is $35.95 per unit, variable cost is $21.4 per unit, fixed costs are $775,000 per year. Tax rate is 35% and discount rate is 11%.

1) calculate base-case profit, profit with a 100-unit increase or 100-unit decrease, and break-even units

2) how much is base-case NPV? What is changes on NPV with a 100-unit increase in sales?