Hercules Ltd. sold $200,000 of lumber in the last year. They were operating at 94% of fixed capacity and current sales are $350,000, how fast can the company grow before any new fixed assets are needed?

The inflation rate over the past year was 4.2 percent. If an investment had a real return of 9.4 percent, what was the nominal return on the investment?

Suppose the shares of Hector Financial are expected to pay a dividend of $10 next year. The annual growth rate is expected in the long term to be 2%. Investors require an 11% return on their investment in Hector Financial. What should be the price of this stock?

Select one:

a. $90.91

b. $92.73

c. $111.11

d. $113.33

What is the monthly salary of Padmavati if she agrees to a 25 year contract whose value today is $235,000. She gets a signing bonus equal to 15 percent of the contract value and agrees to an APR of 5.29 percent compounded monthly?

Multiple Choice

• $1,201.72

• $1,161.66

• $1,196.44

• $1,261.80

• $1,215.62

A company is projected to generate free cash flows of $164 million per year for the next 3 years (FCFF1, FCFF2 and FCFF3). Thereafter, the cash flows are expected to grow at a 2.0% rate in perpetuity. The company's cost of capital is 10.2%. What is your estimate for its enterprise value? Answer in millions, rounded to one decimal place (e.g., $213,456,789 = 213.5).

If a perpetuity that pays 105 once a year, what is its Macaulay duration? Assume a 10% yield.

A. 9

B. 12

C. 10

D. 11

1. SpinCo. is considering a new investment in a 3 year project to manufacture and sell turntables. The firm believes it can sell turntables for $900 each and manufacture them at a variable cost per unit of $400 excluding depreciation expense. The estimated annual SG&A costs for the project are $1 million excluding depreciation expense. The project will require an upfront investment in new fixed assets of $6 million. SpinCo. will depreciate these assets on a straight line basis over the 3 year life of the project. SpinCo. expects to sell the fixed assets at the termination of the project for a salvage value of $1 million. The project is expected to require operating capital investments of $500k per year in years 1, 2 and 3. SpinCo. expects to recapture all of its operating capital investment at the termination of the project. SpinCo. has a 30% tax rate and requires a return of 12.19% on any new investments. The firm believes it can sell 10,000 turntables per year. (20 points)

1. What is the proposed project's Net Present Value?

2. What is the proposed project’s Profitability Index? (2 decimal places)

3. Is the project’s IRR greater than or less than 12.19% (please circle or highlight your answer)

You buy a 20-year, 6.3% Treasury bond that is quoted at 101.19.

A. What is the yield to maturity on this bond?

B. If, 4 years later, the bond is selling to yield 5.6%, what would be your percentage return if you then sold the bond?

The owner of a small business borrowed $300,000 today (year 0) with an agreement to repay the loan with equal quarterly payments over a five year time period. If the interest rate is nominal 24% per year compounded quarterly, his loan payment each quarter is equal to:

A. $109,275

B. $71,220

C. $26,154

D. $19,938

Marmaduke was in a combat zone from January 1 to April 15. During the year, the military paid $200 each month for her students loan. How much of that is taxable.

A $0

B $1200

C $1600

D $2400.