1. The Kumar corp is planning on issuing bonds that pay no interest but can be converted into $6000 at maturity, 9 years from their purchase.To price these bond competitively with other bods of equal risk, it is determined that they should yield at 9 percent, compounded annually. At what price should the kumar corp sell these bonds? Round to nearest cent(two decimal places) 4.The market price is $925 for a 16 year bond ($1,000 par value) that pays 11 percent interest (5.5 percent semiannually)what is the bonds expected rate of return? 5. Shelly bond have a coupon rate of 16 percent. The interest is paid semiannually, and the bonds mature in 13 years. Their par value is $1,000. If your required rate of return is 9 percent, what is the value of the bond? What is the value of the interest paid annually? 6. You are planning to purchase 100 shares of preferred stock and must choose between Stock A and Stock B. Stock A pays an annual dividend of $3.75 and is currently selling for $32. Stock B pays an annual interest of $3.55 and is selling for $34. If your required return rate is 11.08 percent, which stock should you choose? What is the expected return of stock A? What is the expected return of stock B? Which should you choose? 7. Dalton Inc. has a return on equity of 12.9 percent and retains 59 percent of its earnings for reinvestment purposes. It recently paid a dividend of $3.00 and the stock is currently selling for $44. What is the growth rate for Dalton Inc? What is the expected return for Daltons stock? If you require a 13 percent return, should you invest in the firm? Yes or no? 8. You intend to purchase Marigo common stock at $49.00 per share, hold it for 1 year, and then sell it after a dividend of $5.25 is paid. How much will the stock price have to appreciate for you to satisfy your required rate of return of 18 percent? 9.Which for of business organization limits the liability of owners? 10. Rogue industries reported the following items for the current year. Sales=$3,000,000;Cost of goods sold=$1,500,000;Depreciation expense=$170,000;Administrative Expenses=$30,000;Marketing Expenses=$80,000;and Taxes=$300,000. What is Rogues gross profit? 11.A corporation has annual sales of $18 million, total assets of $4 million, a debt ratio of 40%, depreciation expense of $200,000, and tax rate of 40%. What is the corporations total stockholders equity? 12. Generally accepted accounting principles (GAAP) require finance statements prepared on a cash basis because these statements are most useful for investors and managers. True or False 14.Benkart Corporation has sales of $5,000,000, net income of $800,000, total assets of $2,000,000, and $100,000 shares of common stock outstanding. If Benkarts P/E ratio is 12, what is the companys current stock price? 15. Given an accounts receivable turnover of 10 and annual credit sales of $900,000, the average collection period is? 16.RBW corp has cash of $48,000; short term notes payable of $35,000, accounts payable of $100,000; accounts payable of $120,000;inventories of $200,000; and accruals of $90,000. What is RBWs current ratio? 17. You have been depositing money at the end of each year into an account drawing 8% interest. What is the balance in the account at the end of year four if you deposited the following amounts? YEAR END OF YEAR DEPOSIT 1 350 2 500 3 725 4 400 18. Last National Bank is offering you a loan at 10%; payments on the loan are to be made monthly. Credit Onion is offering you a loan where payments are to be made semi-annually; the rate on the loan is also 10%. Local Bank down the street is also offering a loan at 10% where the payments are made quarterly. Which loan has the lowest annual cost? 19. You are ready to retire. A glance at your 401(k) statement indicates that you have $750,000. If the funds remain in an account earning 9.0%, how much could you withdraw at the beginning of each year for the next 25 years? 20. Stock W has the following ret…
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