5
Finance Questions
1 Our
finance text book sold 46,500 copies in its first year. The publishing company
expects the sales to grow at a rate of 18.0 percent for the next three years,
and by 10.0 percent in the fourth year. Calculate the total number of copies
that the publisher expects to sell in year 3 and 4. (If you solve this problem
with algebra round intermediate calculations to 6 decimal places, in all cases
round your final answers to the nearest whole number.)
a) number
of copies sold in 3 years
b) number
of copies sold in the 4 year
2 Trigen
Corp. management will invest cash flows of $982,381, $760,630, $385,467,
$818,400, $1,239,644, and $1,617,848 in research and development over the next
six years. If the appropriate interest rate is 5.58 percent, what is the future
value of these investment cash flows six years from today? (Round answer to 2
decimal places, e.g. 15.25.)
3Barbara
is considering investing in a stock and is aware that the return on that
investment is particularly sensitive to how the economy is performing. Her
analysis suggests that four states of the economy can affect the return on the
investment. Using the table of returns and probabilities below, find
Probability
Return
Boom 0.1
25.00%
Good 0.3
15.00%
Level 0.1
10.00%
Slump 0.5
-5.00%
What is
the expected return on Barbara’s investment? (Round answer to 3 decimal places,
e.g. 0.076.)
What is
the standard deviation of the return on Barbara's investment? (Round intermediate calculations and answer to 5 decimal places, e.g. 0.07680.)
4:Trevor
Price bought 10-year bonds issued by Harvest Foods five years ago for $940.18.
The bonds make semiannual coupon payments at a rate of 8.4 percent. If the
current price of the bonds is $1,013.52, what is the yield that Trevor would
earn by selling the bonds today? (Round intermediate calculations to 4 decimal
places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.)
5 The
First Bank of Ellicott City has issued perpetual preferred stock with a $100
par value. The bank pays a quarterly dividend of $1.65 on this stock. What is
the current price of this preferred stock given a required rate of return of
14.0 percent? (Round answer to 2 decimal places, e.g. 15.25.)
TUTORIAL PREVIEW
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a) number of
copies sold in 3 years:
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Rate =
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18%
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Nper =
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3
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PV =
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-46500
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FV =?
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File name: 5
Finance probs.xls File type: doc PRICE: $12
