D) 6.11% E) 7.27%
41.King Noodles' bonds have a 9% coupon rate. Interest is paid quarterly and the bonds have a maturity of 10 years. If the appropriate discount rate is 10% on similar bonds, what is the price of King Noodles' bonds?
A) $937.24 B) $938.55 C) $971.27 D) $989.63 E) $991.27
Use the following to answer questions 17-19:
Rob and Laura wish to buy a new home. The price is $387,500 and they plan to pay 20% of it as down payment. New Rochelle Savings and Loan will lend them the remainder at a 9% fixed APR for 30 years, with monthly payments to begin in one month. (Ignore taxes.)
42.How much will their monthly payments be?
A) $2,494.33 B) $2,825.99 C) $3,512.56 D) $3,645.45 E) $3,760.45
43.What will the outstanding balance of the loan be after ten years
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assuming you make the first 120 payments exactly on time?
A) $ 99,610 B) $135,467 C) $277,232 D) $239,144 E) $170,509
44.Suppose Rob wants to pay off the loan in 15 years. How much extra must he pay each month to do so?
A) $311.25 B) $501.19 C) $649.90 D) $811.35 E) $914.47 45.Etling Inc.'s dividend is expected to grow at 5% for the next 2 years and then at 3% forever. If the current dividend is $2 and the required return is 14%, what is the price of the stock?
A) $19.43 B) $23.82
C) $25.15
D) $27.58
E) $29.70
46.Given the following cash flows, what is the present value if the discount rate is 8%?
YearCash Flow1$4002$2503$9004$1925
A) $1,415.07 B) $2,714.09 C) $2,865.70 D) $3,058.96 E) $3,222.62
47.If the following bonds are identical except for coupon, what is the price
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of bond B?
Face valueSemiannual CouponYears to maturityPriceBond A$1,000$5025$1,150.00Bond B$1,000$4025?
A) $944.58 B) $ 975.31 C) $1,037.86 D) $1,150.00 E) $1,279.47
48.You have $100,000 to invest. Your bank offers one-year certificates of deposit with a stated rate of 3.50% compounded quarterly. What rate compounded semiannually would provide you with the same amount of money at the end of one year?
A) 3.485% B) 3.500% C) 3.505% D) 3.510% E) 3.515%
49.Fast Eddie's Used Cars will sell you a Mazda Miata for $5,000. You agree to make weekly payments of $60 for 2 years, beginning one week after you buy the car. What is the EAR of this loan?
A) 20.04% B) 22.85%
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C) 25.61% D) 32.34% E) 43.01%
50.Bonds will be issued for a new project. Bonds in the same risk class issued by another firm are currently priced at $1,068.55, have 15 years remaining to maturity, and pay coupons of $90 every year. If this firm's marginal tax rate is 35%, what is the project's pretax cost of debt?
A) 8.19% B) 7.47% C) 5.32% D) 6.12% E) 9.00%
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