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1. All of the following represent cash flows to the firm EXCEPT:
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2. UGS has sales of $2 million a year and days sales outstanding of 35 days, what is its average accounts receivable outstanding (assume a 360 day year)?
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3.Today you have decided to begin making annual deposits of $2,000 into a
savings account that pays 5% annual interest compounded annually. After 10
years and 11 deposits, how much will you have in your account?
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4. What is the value today of a perpetual stream of $2,000 annual
payments, if the first payment is to be received today and annual interest rates
are 4.5% compounded annually?
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5. You have just won the J. Ventura Congeniality Award. You are to receive
$200,000 total, to be divided into 10 equal payments of $20,000 with the first
payment to be received today. Evaluate the value of the award today at an
interest rate of 6.59% compounded annually.
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6. ADPT paid its annual dividend of $1.35 yesterday. Annual dividends are
expected to grow at a rate of .25 for 2 years, and then grow at a rate of .05
forever. What is the value of a share of ADPT's common stock if investors
expect an annual return of .15?
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7. You are evaluating two potential opportunities: ANDW and ADCT. The
expected rate of return on ANDW is 15.8%, and its standard deviation is
2.8%. ADCT's expected rate of return is 20.5% with a standard
deviation of 3.5%. What are the coefficients of variation (CV) for ANDW
and ADCT respectively?
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8. A share of INTC preferred stock pays an annual dividend of $5.00.
The next dividend payment is one year away, and investors demand an annual
return of .10. What is the value of a share of INTC preferred?
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9. You make 10 equal, annual end-of-year deposits of $3,000 to an account paying
7% interest compounded annually. You then increase the size of your
deposit to $6,000 for the next 10 years (10 deposits of $6,000 made at the
end of years 11 through 20). How much will your account hold after you
make your final payment at the end of year 20?
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10. Calculate the value of a semi-annual coupon bond with a face amount of
$1,000, a coupon rate of 6% (the semi-annual interest payment is $30), a
maturity of 12 years and a market yield of 5.5%?
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11. Given the following cash flows, calculate the net present value at a
discount rate of .12:
Year Cash
Flow
0
($8,000)
1
$4,000
2
$7,000
3
$4,000
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12. Given the following probability distribution:
State Probability
Return
Recession
.30 -20%
Normal
.45 10%
Boom
.25 33%
Calculate the standard deviation.
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