Need take a Finance exam at April 28th 1pm MDT , about 40 questions finish in 2hours and provide steps .
COURSE REVIEW HOMEWORK
(
MULTIPLE CHOICE. Choose the one alternative that best answers the question.
)
1
. Which of the following appears to be the most appropriate goal for corporate management?
A) Maximizing the company’s market share.
B) Minimizing the company’s liabilities.
C) Maximizing the current profits of the company.
D) Maximizing market value of the company’s shares.
2
. C
orporate managers are expected to make corporate decisions that are in the best interest of:
A) top corporate management.
B) the corporation’s board of directors.
C) the corporation’s shareholders.
D) all corporate employees.
3
. Which one of the following can best be characterized as an agency problem?
A) Having a higher than industry average rate of defects on the firm’s products.
B) Differing opinions among directors as to the merits of paying a higher dividend.
C) Management dispute over which accounting firm to use.
D) Differing incentives between managers and owners.
4
. A primary market would be utilized when:
A) shares of common stock are exchanged.
B) a commission must be paid on the transaction.
C) securities are initially issued.
D) investors buy or sell existing securities.
5
. The primary distinction between securities sold in the primary and secondary markets is:
A) the riskiness of the securities.
B) whether the securities are new or already exist.
C) the price of the securities.
D) the profitability of the issuing corporation.
6
. Assume the total expense for your current year in college equals $2
0
,000. How much would your parents have needed to invest
21
years ago in an account paying
8
% compounded annually to cover this amount?
A) $1,
7
28.08
B) $2,
9
52.46
C) $3,973.
12
D) $1,600.00
7. A
pproximately how much must you have saved by retirement if you want to withdraw $
10
0,000
for
25
years if your account earns 9% annually and the first withdrawal occurs one year after retiring?
A) $982,258
B) $887,320
C) $1,128,433
D) $925,667
8. You just won the lottery. You will receive $
50,000
per year for 10 years with the first payment being made 5 years from today. If the discount rate is 7%, what is the present value of your winnings?
A) $277,152.33
B) $310,5
47
.48
C) $250,3
85
.83
D) $291,662.95
9. A
struggling college student only has $5,000 in her bank account. What interest rate must she earn on her account if she wants to accumulate $1 million in
35
years by adding $10,000 annually?
A) 5.34%
B)
7.8
5%
C) 9.67%
D) 6.42%
10. Cleveland signed a contract that will provide four annual cash inflows of $
4
1,000
, $
11,000
, $
35,000
, and $
56,000
respectively with the first payment of $41,000 occurring three years from today. What is the contract worth today at a discount rate of 6%?
A) $106,559
B) $108,769
C) $199,999
D) $112,555
11. You want your 10-year-old child to have a million dollars in the future. Today you deposit $25,000 in an account that earns
8.5
%. The money will be distributed to your child when the total reaches $1 million. How old will your child be when the money is distributed?
A) 59
B) 55
C) 45
D) 61
12. You just bought a new car. You paid $5,000 down at time zero. You will then make payments of $500 per month for the next 48 months. At the end of 48 months you will make a balloon payment of
$10,000. Based on this payment schedule and an interest rate of 6%, what is the value (present value) of your car today?
A) $51,338.12
B) $37,98
7.5
4
C) $34,161.
14
D) $29,481.27
13
. The present value of an ordinary annuity is $1600 when valued at 10%. How much would the value change if this was an annuity due?
A) $1,440
B) $178
C) $82
D) $160
14. Using a discount rate of 8%, how much more is a perpetuity of $
80
0
worth than a
30
-year annuity of the same amount?
A) $994
B) $876
C) $723
D) $919
15. What is the expected real rate of interest for an account that offers a 12% nominal rate of return when the rate of inflation is 6% annually?
A) 5.00%
B) 9.46%
C) 6.00%
D) 5.66%
16. If the effective annual rate of interest is known to be
16.08
% on a debt that has quarterly payments, what is the annual percentage rate?
A) 15.19%
B) 16.02%
C) 14.50%
D) 12.02%
17. What is the effective annual interest rate on a 9% APR automobile loan that has monthly payments? A) 9.00%
B) 8.65%
C) 9.38%
D) 9.81%
18. The coupon rate of a bond equals:
A) the annual interest divided by the current market price.
B) its yield to maturity.
C) the yield to maturity when the bond sells at a discount.
D) a defined percentage of its face value.
19. When an investor purchases a $1,000 par value bond that was quoted at 97.162, the investor:
A) receives $971.62 upon the maturity date of the bond.
B) pays 97.162% of face value for the bond.
C) pays $10,971.62 for a $10,000 face value bond.
D) receives 97.162% of the stated coupon payments.
20. Assume a bond is currently selling at par value. What will happen in the future if the yield on the bond is lower than the coupon rate?
A) The coupon rate of the bond will increase.
B) The coupon payments will be adjusted to the new discount rate.
C) The par value of the bond will decrease.
D) The price of the bond will increase.
21. How much should you pay for a $1,000 bond with a 10% coupon, annual payments, and 5 years to maturity if the interest rate is 12%?
A) $927.
90
B) $981.40
C) $1,000.00
D) $1,075.82
22. A
bond has a coupon rate of 8%, pays interest annually, sells for $962, and matures in 3 years. What is its yield to maturity?
A) 9.52%
B) 4.78%
C) 12.17%
D) 5.48%
23. What is the coupon rate for an annual coupon bond with 3 years to maturity, a price of $1,026, and a yield to maturity of 7.5%?
A) 9.25%
B) 6.67%
C) 8.50%
D) 7.42%
24. When a fixed-rate bond has its rating upgraded from B to A, then:
A) the bond’s current yield increases.
B) the bond’s price increases.
C) the bond’s face value decreases.
D) the bond’s coupon rate increases.
25. If a project’s expected rate of return exceeds its opportunity cost of capital, one would expect:
A) the NPV to be zero.
B) the project to have a positive NPV.
C) the profitability index to be negative.
D) the opportunity cost of capital to be too low.
26. What is the NPV of a project that costs $
100
,000 and returns $50,000 annually for 3 years if the opportunity cost of capital is 14%?
A) $33,749
B) $14,473
C) $13,398
D) $16,082
27. The ratio of net present value to initial investment is known as the:
A) net present value.
B) profitability index.
C) internal rate of return.
D) payback period.
28. What is the profitability index for a project costing $40,000 and returning $
15,000
annually for 4 years at an opportunity cost of capital of 12%?
A) 0.861
B) 0.500
C) 0.139
D) 0.320
29. A polisher costs $10,000 and will cost $
20,000
a year to operate and maintain. If the discount rate is 10% and the polisher will last for 5 years, what is the equivalent annual cost?
A) $17,163
B) $22,638
C) $19,411
D) $22,188
30. What is the equivalent annual cost for a project that requires a $40,000 investment at time zero, and a
$10,000 annual expense during each of the next 4 years, if the opportunity cost of capital is 12%? A) $21,356
B) $25,237
C) $23,169
D) $20,000
31. When is it appropriate to include sunk costs in the evaluation of a project?
A) If they are considered to be overhead costs.
B) If they improve the project’s NPV.
C) Whenever they are relatively large.
D) Never.
32. Investments in working capital:
A) do not matter because the cash is generally recovered when the project ends.
B) reduce project NPV.
C) increase NPV because they make the project more valuable.
D) are simply accounting entries and do not affect NPV.
33. What is the net effect on a firm’s cash flow of a $100,000 increase in accounts receivable, $250,000 increase in inventory and $75,000 increase in accounts payable?
A) -$275,000
B) -$425,000
C) -$225,000
D) $75,000
34. In what manner does depreciation expense affect investment projects?
A) It reduces taxes by the amount of the depreciation expense.
B) It reduces taxable income by the amount of the depreciation expense.
C) It reduces cash flows by the amount of the depreciation expense.
D) It increases cash flows by the amount of the depreciation expense.
35. Cookie Castle [CKC] issued $
1,000,000
of debt with a cost of debt of 8%. If CKC has a 25% tax rate and intends to maintain the debt continuously, what is the present value of the perpetual debt tax shield? A) $250,000
B) $170,000
C) $320,000
D) $20,000
36. When a depreciable asset is ultimately sold, the after-tax cash flow from the sale is:
A) not used in capital budgeting.
B) reduced by the book value of the asset.
C) the total sales price minus tax.
D) the same as the after-tax accounting amount.
37. Seven years ago, you purchased a new packaging machine for $90,000 and depreciated it straight-line over a 10-year life. Today, you sold the machine for $35,000. If your tax rate is 25%, what is the after- tax cash flow from the sale of the machine?
A) $33,000
B) $26,250
C) $24,819
D) $8,000
38. What is the annual depreciation tax shield for a $100,000 annual depreciation expense if the tax rate is 21%?
A) $79,000
B) $15,500
C) $21,000
D) $25,000
39. A firm invests $10 million in a new stamping machine. It depreciates the machine straight-line over 5 years. The tax rate is 21% and the discount rate is 8%. What is the PV of the depreciation tax shield? A) $3,000,000
B) $634,978
C) $2,579,497
D) $1,676,938
40. What is the NPV of an 8-year project that costs $200,000, has annual revenues of $75,000 and cash expenses of $25,000? Assume the investment is depreciated straight-line over 8 years, the corporate tax rate is 21%, and the discount rate is 13%.
A) $13,411
B) $14,182
C) $15,560
D) $14,745
41. Suppose marginal tax rates are 18% for income below $50,000, 22% from $50,000 to $60,000, and 25% for income above $60,000. What is the average tax rate for an individual that earned $72,000? A) 19.72%
B) 21.67%
C) 20.28%
D) 18.76%
42. A
stock’s beta measures the:
A) sensitivity of the stock’s returns to those of the market portfolio.
B) market risk premium on the stock.
C) difference between the return on the stock and the return on the market portfolio.
D) average return on the stock.
43. When using CAPM to find required rates of return, why is diversifiable risk ignored?
A) Only systematic risk is rewarded.
B) There is no method for quantifying diversifiable risk.
C) Beta includes a component to compensate for diversifiable risk.
D) Diversifiable risk is compensated by the market risk premium.
44. The 4-week T Bill rate is 2% and the market risk premium is 8%. If you have a portfolio consisting of 50% of the risk-free asset and 50% in the market, what is the expected return on your portfolio?
A) 2%
B) 4%
C) 5%
D) 6%
45. What is the beta of a 3-stock portfolio consisting of $10,000 of Stock A with a beta of 0.90, $8,000 of Stock B with a beta of 1.05, and $2,000 of Stock C with a beta of 1.70?
A) 1.00
B) 1.04
C) 1.17
D) 1.22
46. A project has a beta of 1.24, the risk-free rate is 3.8%, and the market rate of return is 9.2%. What is the project’s expected rate of return?
A) 11.41%
B) 15.21%
C) 10.50%
D) 14.61%
47. The project cost of capital is:
A) not necessarily related to the company cost of capital.
B) greater than the company cost of capital because the project has specific risk.
C) less than the company cost of capital.
D) equal to the company cost of capital.
48. TJ Maxx (beta 0.67) is evaluating a project in the airline industry (beta 1.70). If the risk-free rate is 1.9% and the market risk premium is 11%, what is the required rate of return on this project?
A) 20.60%
B) 17.37%
C) 9.27%
D) 8.00%
49. A
company’s nominal pre-tax cost of debt is represented by the:
A) yield to maturity on outstanding bonds.
B) coupon rate of current bonds.
C) return calculated by CAPM.
D) company’s beta.
50. A firm has 12,500 shares of stock outstanding that sell for $42 each. The book value of equity is
$400,000. The firm has also issued $250,000 face value of debt that is currently quoted at 101.2. What value should be used as the weight of equity when computing WACC?
A) 72.09%
B) 61.54%
C) 67.48%
D) 69.74%
51. If a firm with no current liabilities has a long-term debt to equity ratio of 1, then:
A) The firm has a total debt ratio of 0.5.
B) The firm has more equity than debt.
C) The firm has no diversifiable risk.
D) The firm has a high cost of equity.
52. Debt provides a tax shield for the company because:
A) the amount of debt reduces taxable income.
B) the amount of interest reduces the total taxes payable.
C) the amount of interest reduces taxable income.
D) the amount of debt reduces the total taxes payable.
5
3. D
ell Technologies [DELL] has 700 million shares of common stock outstanding which currently sell at
$55 per share. It also has $10 billion in book value debt currently quoted at 101. What value should be used as the weight on debt when computing DELL’s WACC?
A) 79.22%
B) 19.41%
C) 28.63%
D) 20.78%
54. Wayfair [W] has 90 million shares of common stock outstanding which currently sell at $86 per share. W has a beta of 1.85. If the risk-free rate is 1.8% and the expected return on the market is 12.2%, what is W’s cost of equity?
A) 21.04%
B) 24.37%
C) 22.57%
D) 25.90%
55. Dick’s Sporting Goods [DKS] has 110 million shares of common stock outstanding which currently sell at $39 per share. DKS also has 1.3 million outstanding bonds that mature in 14 years. The bonds have a face value of $1,000, pay an annual coupon of 9% and currently sell at 110. DKS has a beta of 0.59 and a tax rate of 21%. If the risk-free rate is 1.85% and the market risk premium is 12%, what is DKS’s WACC?
A) 8.24%
B) 7.05%
C) 5.71%
D) 6.98%
Answer Key
1. D
2. C
3. D
4. C
5. B
6. C
7. A
8. C
9. A
10. B
11. B
12. C
13. D
14. A
15. D
16. A
17. C
18. D
19. B
20. D
21. A
22. A
23. C
24. B
25. B
26. D
27. B
28. C
29. B
30. C
31. D
32. B
33. A
34. B
35. A
36. C
37. A
38. C
39. D
40. D
41. A
42. A
43. A
44. D
45. B
46. C
47. A
48.
A
49. A
50. C
51. A
52. C
53. D
54. A
55. A
COURSE REVIEW HOMEWORK SOLUTIONS
Question 06
N I/Y PV PMT FV |
||||||||||||||||||||||||||||
INPUTS |
21 | 8 | 0 | 20,000 | ||||||||||||||||||||||||
CPT |
βππ, ππππππ. ππππ |
Question 07
25 | 9 | 100,000 | |
βππππππ, ππππππ |
Question 08
50,000 | 7 |
250,385.83 |
|||||
5 | 10 |
Question 09
35 |
β5,000 |
β10,000 |
1,000,000 | |||
5.34 |
Question 10
41,000 | 11,000 | 35,000 | 56,000 | 6 |
108,769 |
2 | 1 | ||||
Tip: To push inflow 1 out to year 3, enter 2 cash flows of zero amount in C01 |
Question 11
8.5 |
β25,000 |
45.22 |
|
Add N to the age of the child today. 45.22 + 10 = ππππ. ππππ |
Question 12
β$5,000 |
β$500 |
β$10,500 |
6 Γ· 12 = 0.5 |
βππππ, ππππππ. ππππ |
47 | ||||
Note: This is a simple PV question when using the CF worksheet. You could also calculate each payment separately using TVM and then sum their PVβs. |
(
ππ
ππ
π΄π΄π΄
π΄
=
ππ
π΄
π΄
(
1
+
π
π
)
=
$1
,
600
(
1
.
10
)
=
$1
,
760
$1,760 β $1,600 =
$
ππππππ
A shortcut to find the difference is to multiply
ππππ
π΄π΄
Γ
ππ
= $1,600 Γ 0.10 = $160
)Question 13
Question 14
ππππππ $800 ππππππππππππ = ππ = 0.08 = $10,000 |
|
30 | 800 |
β9,006.23 |
|
Difference: $10,000 β 9,006.23 = ππππππ. ππππ |
(
1.06
1.12
β
1
=
β
1
=
0.0566
=
ππ
.
ππππ
%
1
+
ππππππππππππππ
ππππππππ
1
+
π
π
ππ
ππ
πππππ
π
π
π
πππ
π
πππ
π
ππ
ππ
ππππππππ
ππππππππ
=
)Question 15
Question 16
πΈπΈπΈπΈπΈπΈ = 16.08 ππ = 4 πΈπΈπππΈπΈ = ππππ. ππππ Use βICONVβ function: |
|||||
16.08 | 4 |
15.19 |
Question 17
πΈπΈπππΈπΈ = 9 ππ = 12 πΈπΈπΈπΈπΈπΈ = ππ. ππππ Use βICONVβ function: |
|||||
12 |
9.38 |
Question 21
100 | 1,000 | |||
βππππππ. ππππ |
||||
You need to find the coupon payment PMT: ππππππ = ππππππππ π£π£πππππ£π£ππ Γ πππππ£π£ππππππ ππππππππ = $1,000 Γ 0.10 = $100 |
Question 22
3 |
β962 |
80 | ||
ππ. ππππ |
||||
Unless specifically told otherwise, assume the face value of a bond is $1,000. To find coupon payment (ππππππππ π£π£πππππ£π£ππ Γ πππππ£π£ππππππ ππππππππ) |
Question 23
7.5 |
β1,026 |
85 | |
Unless specifically told otherwise, assume the face value of a bond is $1,000.
Solve for PMT then divide it by the face value: πππππ£π£ππππππ ππππππππ = 85 Γ· 1,000 = 0.10 = ππ. ππ% |
Question 26
β100,000 |
14 |
16,082 |
Question 28
β40,000 |
15,000 |
5,560.24 |
|
ππππ = 5,560.24 Γ· 40,000 = ππ. ππππππ |
Question 29
β20,000 |
β85,815.74 |
|
Find NPV of costs, then use TVM Worksheet to find the equivalent annual annuity. |
||
ππππ, ππππππ |
Question 30
β70,373.49 |
|
ππππ, ππππππ. ππππ |
(
Investments in WC decrease cash flows, while reductions in WC increase cash flows. WC Reductions include current liabilities, e.g., Accounts Payable
WC Investments include current assets, e.g., Accounts Receivable, Inventory
πΆ
πΆ
πΆπΆ
=
πππΆπΆ
πΈπΈ
π
π
π
π
π£π£
πππ
π
π
π
π
π
ππ
π
π
β
πππΆπΆ
π
π
ππ
π£π£πππ
π
π
π
πππ
π
ππ
π
π
πΆπΆπΆπΆ
= $75,000 β $100,000 β $250,000 =
β
$
ππππππ
,
ππππππ
)Question 33
(
PV of Perpetual Debt Tax Shield =
π
π
ππππππ
Γ
πππππ‘π‘
ππππππππ
= $1,000,000 Γ 0.25 =
$
ππππππ
,
ππππππ
)Question 35
(
A
ft
e
r
β
t
a
x
c
a
sh
f
l
o
w
=
π
π
ππ
π
π
π
π
πππ
π
π π
π
π
πππ
π
π
π
ππ
β
(
π π
π
π
πππ
π
πππ
π
π
π
πππππ
π
Γ
ππ
π
π
π‘π‘
πππ
π
ππ
π
π
)
π
π
π
π
π
π
π
π
π
π
π
π
π
π
πππ
π
π
π
πππ
π
=
$90
,
000
Γ·
10
=
$9
,
000
ππ
ππππ
ππ
π£
π£
πππ
π
π£π£
ππ
=
(
πππ
π
π
π
π π
π
π
ππ
πππ
π
π
π
π
π
π
π
π
π
β
ππππ
π
π
π£π£
ππ
π£π£
πππππ
π
π
π
π
π
π
π
π
π
πππ
π
π
π
π
π
πππ
π
ππ
ππππ
π
π
)
=
$90
,
000
β
(
7
Γ
9
,
000
)
=
$27
,
000
π π
π
π
πππ
π
πππ
π
π
π
ππ
π
π
ππ
=
(
π
π
π
π
πππππ
π
π
π
π π
πππ
π
ππππ
ππ
β
ππ
ππππ
ππ
π£
π£
ππππ
π£
π£
π
π
)
=
$3
5
,
000
β
$27
,
000
=
$8
,
000
πππ
π
ππ
π
π
π
π
–
ππ
π
π
π‘π‘
π
π
πππ
π
β
ππ
ππππ
ππ
=
$35
,
000
β
(
$
8
,
000
Γ
0
.
25
)
=
$
ππππ
,
ππππππ
)Question 37
(
D
e
p
r
e
c
i
a
tio
n
T
a
x
S
h
i
e
l
d
=
(
π
π
π
π
π
π
π
π
π
π
π
π
π
π
πππ
π
π
π
πππ
π
Γ
ππ
π
π
π‘π‘
πππ
π
ππ
π
π
)
=
$100
,
000
Γ
0
.
21
=
$
ππππ
,
ππππππ
)Question 38
Question 39
Annual Depreciation = (ππππππππππππππ πππππ£π£πππ π ππππππππππ Γ· π¦π¦πππππππ π ) = $10,000,000 Γ· 5 = $2,000,000 Annual Depreciation Tax Shield = (π π ππππππππππππππππππππππ Γ πππππ‘π‘ ππππππππ) = $2,000,000 Γ 0.21 = $ 420,000 Then use TVM Worksheet to find PV of Depreciation Tax Shield. |
420,000 |
βππ, ππππππ, ππππππ |
Question 40
Depreciation = (ππππππππππππππ πππππ£π£πππ π ππππππππππ Γ· π¦π¦πππππππ π ) = $200,000 Γ· 8 = $25,000 Operating CF: Revenue $75,000 Expenses -$25,000 Depreciation -$25,000 Pre-Tax Profit $25,000 Tax @ 21% -$5,250 Net Income $19,750 Add Depreciation $25,000 Operating CF $ 44,750 |
|||
β200,000 |
44,750 | 13 |
14,745 |
(
Calculating marginal tax rates is a simple weighted average:
$50,000 Γ 0.18 = $9,000
$10,000 Γ 0.22 = 2,200
(72,000 β 60,000) Γ 0.25 = 3,000
Average Tax Rate =
(
$9,000 + $2,200 + $3,000
)
Γ· $72,000 = 0.1972 =
ππππ
.
ππππ
%
)Question 41
(
πππ
π
ππ
π£π£
π
π
ππ
πππ
π
ππ
β
ππ
π
π
π
π
πππ
π
π
π
ππ
=
(
π
π
π
π
πππ
π
π
π
ππ
π
π
π
π
π
π
ππ
π
π
π
π
π
π
πππ
π
π£π£
ππ
+
π
π
πππ
π
π
π
–
ππ
πππ
π
ππ
πππ
π
ππ
π
π
)
=
8%
+
2%
=
10%
πππ
π
ππ
π£π£
π
π
ππ
πππ
π
ππ
β
ππ
π
π
πππ
π
ππ
ππ
πππππ
π
ππ
=
(
0
.
5
Γ
2%
)
+
(
0
.
5
Γ
10%
)
=
ππ
%
)Question 44
(
π
π
πππ
π
ππ
ππ
πππππ
π
ππ
ππ
πππππ£
π£
ππ
=
$10
,
000
+
$8
,
000
+
$2
,
000
=
$2
0
,
000
ππ
π
π
πππ
π
β
ππ
πππ
π
ππ
ππ
ππππ
ππ
πΈπΈ
=
$10
,
000
Γ·
$2
0
,
000
=
0
.
50
ππ
π
π
πππ
π
β
ππ
πππ
π
ππ
ππ
ππππ
ππ
π΅π΅
=
$
8
,
000
Γ·
$2
0
,
000
=
0
.
40
ππ
π
π
πππ
π
β
ππ
πππ
π
ππ
ππ
ππππ
ππ
πΆπΆ
=
$2
,
000
Γ·
$20
,
000
=
0
.
10
π½π½
ππ
=
(
0.50 Γ 0.90
)
+
(
0.40 Γ 1.05
)
+
(
0.10 Γ 1.70
)
=
ππ
.
ππππ
)Question 45
(
ππ
ππ
=
ππ
ππ
+
π½π½
ππ
οΏ½
ππ
ππ
β
ππ
ππ
οΏ½
ππ
ππ
= 3.8 + 1.24
(
9.2 β 3.8
)
=
ππππ
.
ππππ
%
)Question 46
(
Use the project beta if its risk is different than that of the company.
ππ
ππ
=
ππ
ππ
+
π½π½
ππ
(
πππΈπΈππ
)
ππ
ππ
= 1.9 + 1.70
(
11
)
=
ππππ
.
ππππ
%
)Question 48
(
ππ
$525
ππππ
ππ
ππ
ππ
=
=
$778
=
0.6748
=
ππππ
.
ππππ
%
ππππ
ππ
= $42 Γ 12,500 = $525,000
ππππ
π΄π΄
= $250,000 Γ 1.012 = $253,000
ππ
=
ππππ
ππ
+
ππππ
π΄π΄
=
$525,000
+
$253,000
=
$778,000
)Question 50
(
ππ
$10,100
ππππ
π΄π΄
ππ
π΄π΄
=
=
$48,600
=
0.2078
=
ππππ
.
ππππ
%
(In Millions)
ππππ
ππ
= $55 Γ 700 = $38,500
ππππ
π΄π΄
= $10,000 Γ 1.01 = $10,100
ππ
=
ππππ
ππ
+
ππππ
π΄π΄
=
$38,500
+
$10,100
=
$48,600
)
Question 53
(
ππ
ππ
=
ππ
ππ
+
π½π½
ππ
οΏ½
ππ
ππ
β
ππ
ππ
οΏ½
ππ
ππ
= 1.8 + 1.85
(
12.2 β 1.8
)
=
ππππ
.
ππππ
%
)Question 54
Question 55
(In Millions)
ππππππ = $39 Γ 110 = $4,290 πππππ΄π΄ = $1100 Γ 1.3 = $1,430 ππ = ππππππ + πππππ΄π΄ = $4,290 + $1,430 = $5,720 ππππππ $4,290 ππππ = ππ = $5,720 = 0.75 = 75% πππ΄π΄ = 1 β 0.75 = 0.25 = 25% ππππ = ππππ + π½π½(πππΈπΈππ) = 1.85 + 0.59(12) = 8.93% |
|
πππ΄π΄ |
|
-1,100 |
90 |
7.8 | |
πππΈπΈπΆπΆπΆπΆ = (ππππ Γ ππππ ) + [πππ΄π΄ Γ πππ΄π΄ Γ (1 β ππ)] πππΈπΈπΆπΆπΆπΆ = (0.75 Γ .0893) + [0.25 Γ 0.078 Γ (1 β 0.21)] = 0.0824 = ππ. ππππ% |