1. A project will produce an operating cash flow of $14,600 a year for 8 years. The initial fixed asset investment in the project will be $48,900. The net aftertax salvage value is estimated at $11,000 and will be received during the last year of the project’s life. What is the net present value of the project if the required rate of return is 12 percent?

A. $23,627.54

B. $28,070.26

C. $34,627.54

D. $39,070.26

E. $41,040.83

2. One year ago, you purchased a stock at a price of $32.16. The stock pays quarterly dividends of $0.20 per share. Today, the stock is selling for $28.20 per share. What is your capital gain on this investment?

A. -$4.16

B. -$3.96

C. -$3.76

D. -$3.16

E. -$2.96

3. Six months ago, you purchased 100 shares of stock in Global Trading at a price of $38.70 a share. The stock pays a quarterly dividend of $0.15 a share. Today, you sold all of your shares for $40.10 per share. What is the total amount of your dividend income on this investment?

A. $15

B. $30

C. $45

D. $50

E. $60

4. A year ago, you purchased 400 shares of Stellar Wood Products, Inc. stock at a price of $8.62 per share. The stock pays an annual dividend of $0.10 per share. Today, you sold all of your shares for $4.80 per share. What is your total dollar return on this investment?

A. -$382

B. -$372

C. -$1,528

D. -$1,488

E. -$1,360

5. You own 400 shares of Western Feed Mills stock valued at $51.20 per share. What is the dividend yield if your annual dividend income is $352?

A. 1.68 percent

B. 1.72 percent

C. 1.83 percent

D. 1.13 percent

E. 1.21 percent

6. West Wind Tours stock is currently selling for $48 a share. The stock has a dividend yield of 2.6 percent. How much dividend income will you receive per year if you purchase 200 shares of this stock?

A. $24.96

B. $36.20

C. $124.80

D. $362.00

E. $249.60

7. Jerilu Markets has a beta of 1.09. The risk-free rate of return is 2.75 percent and the market rate of return is 9.80 percent. What is the risk premium on this stock?

A. 6.47 percent

B. 7.03 percent

C. 7.68 percent

D. 8.99 percent

E. 9.80 percent

8. What is the standard deviation of the returns on a stock given the following information?

A. 1.57 percent

B. 2.03 percent

C. 2.89 percent

D. 3.42 percent

E. 4.01 percent

9. Your portfolio is comprised of 40 percent of stock X, 15 percent of stock Y, and 45 percent of stock Z. Stock X has a beta of 1.16, stock Y has a beta of 1.47, and stock Z has a beta of 0.42. What is the beta of your portfolio?

A. 0.87

B. 1.09

C. 1.13

D. 1.18

E. 1.21

10. The outstanding bonds of Tech Express are priced at $989 and mature in 8 years. These bonds have a 6 percent coupon and pay interest annually. The firm’s tax rate is 39 percent. What is the firm’s aftertax cost of debt?

A. 3.01 percent

B. 3.22 percent

C. 3.35 percent

D. 3.77 percent

E. 4.41 percent

11. Phillips Equipment has 80,000 bonds outstanding that are selling at par. Bonds with similar characteristics are yielding 6.75 percent. The company also has 750,000 shares of 7 percent preferred stock and 2.5 million shares of common stock outstanding. The preferred stock sells for $53 a share. The common stock has a beta of 1.34 and sells for $42 a share. The U.S. Treasury bill is yielding 2.8 percent and the return on the market is 11.2 percent. The corporate tax rate is 38 percent. What is the firm’s weighted average cost of capital?

A. 10.39 percent

B. 10.64 percent

C. 11.18 percent

D. 11.30 percent

E. 11.56 percent