1. Adams Enterprises' bonds currently sell for $970. They have a 15-year maturity, an annual coupon of $85, and a par value of $1,000. What is their yield to maturity?

 

2. Over the years, O'Brien Corporation's stockholders have provided $20,000,000 of capital, when they purchased new issues of stock and allowed management to retain some of the firm's earnings. The firm now has 1,000,000 shares of common stock outstanding, and it sells at a price of $44.50 per share. How much value has O'Brien's management added to stockholder wealth over the years, i.e., what is O'Brien's MVA?

 

3.River Corp's total assets at the end of last year were $350,000 and its net income was $32,750. What was its return on total assets?

 

4.How much would $1, growing at 6.5% per year, be worth after 75 years?

 

5.How much would $5000, due in 35 years be worth today if the discount rate were 5.5%?

 

6.You want to quit your job and go back to school for a law degree 4 years from now, and you plan to save $6,800 per year, beginning immediately. You will make 4 deposits in an account that pays 5.7% interest. Under these assumptions, how much will you have 4 years from today?

 

7.Your father is about to retire, and he wants to buy an annuity that will provide him with $58,000 of income a year for 25 years, with the first payment coming immediately. The going rate on such annuities is 5.15%. How much would it cost him to buy the annuity today?

 

8.Suppose you are buying your first condo for $240,000, and you will make a $15,000 down payment. You have arranged to finance the remainder with a 30-year, monthly payment, amortized mortgage at a 6.5% nominal interest rate, with the first payment due in one month. What will your monthly payments be?

 

9.Assume that you are considering the purchase of a 20-year, bond with an annual coupon rate of 9.5%. The bond has a face value of $1,000, and it makes semiannual interest payments. If you require an 8.8% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond

 

10.Sadik Inc.'s bonds currently sell for $1,130 and have a par value of $1,000. They pay a $105 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,100. What is their yield to call (YTC)?

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