# How Much Did You Borrow For Your House If Your Monthly Mortgage Payment

QUESTION 1How much did you borrow for your house if your monthly mortgage payment for a 30 year mortgage at 6. 65% APR is \$1,300?a. \$202,503b. \$186,926c. \$218,080d. \$249,235e. \$233,658f. \$264,8125 points QUESTION 2Your required rate of return is 12%. What is the net present value of a project with the following cash flows?Year012345Cash Flow-750450350150125-100a. 72. 15b. 26. 33c. 37. 37d. 48. 68e. 15. 56f. 60. 275 points QUESTION 3You purchased a stock for \$28 per share. The most recent dividend was \$2. 50 and dividends are expected to grow at a rate of 8% indefinitely. What is your required rate of return on the stock?a. 20. 27%b. 18. 38%c. 19. 25%d. 17. 64%e. 21. 50%f. 17. 00%5 points QUESTION 4You require a risk premium of 3. 5 percent on an investment in a company. The pure rate of interest in the market is 3. 0 percent and the inflation premium is 3 percent. US Treasury bills are risk free. What should be the yield of the US Treasury bills? Use multiplicative form. a. 5. 58%b. 5. 83%c. 6. 35%d. 6. 09%e. 5. 06%f. 5. 32%5 points QUESTION 5The dividend yield of a stock is 6 percent. If the market price of the stock is \$18 per share and its dividends have been growing at a constant rate of 6%, what was the most recent dividend paid by the company?a. \$1. 02b. \$0. 85c. \$1. 36d. \$1. 53e. \$1. 70f. \$1. 195 points QUESTION 6Shady Rack Inc. has a bond outstanding with 9. 25 percent coupon, paid semiannually, and 21 years to maturity. The market price of the bond is \$1,047. 68. Calculate the bond’s yield to maturity (YTM). Now, if due to changes in market conditions, the market required YTM suddenly increases by 2% from your calculated YTM, what will be the percent change in the market price of the bond?a. -17. 76%b. -16. 39%c. -17. 09%d. -14. 87%e. -14. 01%f. -15. 66%5 points QUESTION 7Bonds X and Y are identical, including the risk class. The only difference between A and B is in the coupon payment as shown below. Bond XBond YFace value\$1,000\$1,000Annual Coupon Payment\$120\$130Payment FrequencySemiannualAnnualYears to maturity1515Price\$890. 04? What is the price of bond Y?a. \$989. 75b. \$973. 44c. \$940. 92d. \$925. 88e. \$956. 95f. \$1,007. 155 points QUESTION 8Bonds of Riverhawk Sport Authority (RSA) are selling in the market for \$896. 33. These bonds carry a 9. 25 percent coupon paid semiannually, and have 20 years remaining to maturity. What is the bond’s capital gains yield assuming that the interest rates will remain constant over the year?a. -0. 04%b. -0. 29%c. 0. 08%d. 0. 29%e. -0. 16%f. 0. 18%5 points QUESTION 9A bond with a face value of \$1,000 has annual coupon payments of \$100. It was issued 10 years ago and has 7 years remaining to maturity. The current market price for the bond is \$1,000. Which of the following is true: I. Its YTM is 10%. II. Bond’s coupon rate is 10%. III. The bond’s current yield is 9. 5%. a. I, II, and IIIb. II, III Onlyc. I, II Onlyd. I Onlye. I, III Onlyf. III Only5 points QUESTION 10Apple Sink Inc. (ASI) just paid a dividend of \$2. 50 per share. Its dividends are expected to grow at 30% a year for the next two years, 26% a year for the years 3 and 4, 16% for year 5, and at a constant rate of 6% per year thereafter. What is the current market value of the ASI’s stock if companies in this risk class have a 16% required rate of return?a. \$54. 27b. \$51. 29c. \$42. 87d. \$48. 35e. \$45. 54f. \$56. 035 points QUESTION 11Last year, Jen and Berry Inc. had sales of \$55,000, cost of goods sold (COGS) of 12,000, depreciation charge of \$3,000 and selling, general and administrative (SG&A) cost of \$10,000. The interest costs were \$2,500. Thirty percent of SG&A costs are fixed costs. If its sales are expected to be \$60,000 this year, what will be the estimated SG&A costs this year?a. \$14,250b. \$13,250c. \$10,636d. \$12,667e. \$12,000f. \$11,5005 points QUESTION 12The Retarded Company’s dividends are declining at an annual rate of 2 percent. The company just paid a dividend of \$4 per share. You require a 16 percent rate of return. How much will you pay for this stock?a. \$13. 85b. \$12. 57c. \$19. 20d. \$21. 78e. \$15. 33f. \$17. 095 points QUESTION 13Sales and profits of Growth Inc. are expected to grow at a rate of 25% per year for the next six years but the company will pay no dividends and reinvest all earnings. After that, the dividends will grow at a constant annual rate of 7%. At the end of year 7, the company plans to pay its first dividend of \$5. 00 per share. If the required return is 16%, how much is the stock worth today?a. \$22. 80b. \$18. 24c. \$13. 68d. \$25. 08e. \$20. 52f. \$15. 965 points QUESTION 14BB Lean has identified two mutually exclusive projects with the following cash flows. Year012345Cash Flow Project A-52,000. 0020,000. 0017,000. 0014,000. 0012,000. 007,000. 00Cash Flow Project B-52,000. 006,000. 0017,000. 0016,000. 0017,000. 0022,000. 00 The company requires a 12% rate of return from projects of this risk. What is the IRR of project B?a. 20. 80%b. 13. 90%c. 12. 06%d. 14. 68%e. 13. 05%f. 12. 94%5 points QUESTION 15Sanaponic, Inc. will pay a dividend of \$6 for each of the next 3 years, \$8 for each of the years 4-7, and \$10 for the years 8-10. Thereafter, starting in year 11, the company will pay a constant dividend of \$9/year forever. If you require 20 percent rate of return on investments in this risk class, how much is this stock worth to you?a. \$41. 46b. \$45. 68c. \$50. 50d. \$34. 54e. \$55. 99f. \$37. 775 points QUESTION 16Riverhawk Corporation has a bond outstanding with a market price of \$1,150. 00. The bond has 10 years to maturity, pays interest semiannually, and has a yield to maturity of 9%. What is the bond’s coupon rate?a. 10. 54%b. 11. 31%c. 13. 61%d. 12. 08%e. 9. 77%f. 12. 84%5 points QUESTION 17FED Lean has identified two mutually exclusive projects with the following cash flows. Year012345Cash Flow Project A-52,000. 0019,000. 0016,000. 0014,000. 0012,000. 009,000. 00Cash Flow Project B-52,000. 008,000. 0012,000. 0016,000. 0022,000. 0020,000. 00 The company requires a 12% rate of return from projects of this risk. At what discount rate would you be indifferent between these two projects?a. 26. 0812%b. 3. 1177%c. 14. 7386%d. 15. 8950%e. 34. 1306%f. 13. 5250%5 points QUESTION 18The last dividend on Riverhawk Corporation’s common stock was \$4. 00, and the expected constant growth rate is 10 percent. If you require a rate of return of 20 percent, what is the highest price you should be willing to pay for this stock?a. \$ 33. 00b. \$ 60. 50c. \$ 49. 50d. \$ 38. 50e. \$ 55. 00f. \$ 44. 005 points QUESTION 19BD Lean has identified two mutually exclusive projects with the following cash flows. Year012345Cash Flow Project A-52,000. 0018,000. 0017,000. 0015,000. 0012,000. 009,000. 00Cash Flow Project B-52,000. 0017,800. 0010,000. 0012,000. 0017,000. 0022,000. 00 The company requires an 11. 5% rate of return from projects of this risk. What is the NPV of project A?a. 5,180. 35b. 1,395. 64c. 972. 57d. 417. 37e. 5,972. 87f. 1,624. 905 points QUESTION 20Riverhawk Sport Authority (RSA) will pay a dividend of \$7 for each of the next 3 years, \$8 for each of the years 4-6, \$9 for each of the years 7-9, and a dividend of \$10 for year 10. Thereafter, the company will pay no dividends. If you require 12 percent rate of return on investments in this risk class, how much is this stock worth to you?a. \$42. 77b. \$37. 80c. \$44. 66d. \$39. 35e. \$41. 00f. \$46. 685 points QUESTION 21Bonds of Riverhawk Sport Authority (RSA) are selling in the market for \$1,166. 93. These bonds carry a 10. 25 percent coupon paid semiannually, and have 20 years remaining to maturity. What is the bond’s yield to maturity?a. 11. 00%b. 8. 50%c. 9. 00%d. 10. 00%e. 9. 50%f. 10. 50%