You have the

following information about your company’s financing sources:

1)   

Equity

Information

•         

•         

•         

•         

•         

2)    Debt Information

•      

Face value per bond =

$1,000

•      

500,000 bonds

outstanding

•       Current bond price = $1,200

•      

Coupon rate = 5% p.a.,

semiannual coupons

•       10 years to maturity

•       Tax rate = 40%

What is the weighted

average cost of capital for your company?

You are looking at

a new project and you have estimated the following cash flows and net profit

(in million $):

–       

–       

–       

–       

Average Book Value

of Investment (in million $) is $ 150

Your required

return for assets of this risk is 20%.

What is the Average

Accounting Return for the project?

Give the answer in

percentage, rounding to the nearest unit, with no decimal places (e.g., if the

answer would be 3.234%, give 3; or if the answer would be 4.562%, give 5).

All else the same, if interest rates fall, the

percentage price change for short-term bonds will be smaller than for long-term

bonds.

You begin saving by

depositing $12,000 per year in your savings account. If the interest rate is 5.2%

per year, how much will you have in 30 years?

Give the answer in

thousands of dollars without decimal places, rounding to the nearest thousand

(e.g., if the answer would be $154,790.34, give 155; or if the answer would be

$154,392.28, give 154).

You have a 7-year

loan of $400,000. The interest rate is 4 percent per year, and the loan calls

for equal total annual payments. How much total interest is paid in the fifth year?

Give the answer in

thousands of dollars without decimal places, rounding to the nearest thousand

(e.g., if the answer would be $54,790.34, give 55; or if the answer would be $54,392.28,

give 54).

Kerr Inc. has 150,000

shares of common stock outstanding, and the market price for a share of stock

at the end of 2023 was $2. Book value of common stock at the end of 2023 was $60,000.

Book value of retained earnings at the end of 2023 was $40,000. What is the

market-to-book ratio at the end of 2023?

John wants to provide $1,000,000 in 20 years towards his retirement.

John has currently $100,000 in his savings account. What annual interest rate

must John earn to have the $1,000,000 when he needs it?

Give the

answer in percentage, rounding to the nearest unit, with no decimal places

(e.g., if the answer would be 3.234%, give 3; or if the answer would be 4.562%, give 5).

You have a 7-year

loan of $600,000. The interest rate is 6 percent per year, and the loan calls

for equal principal payments. How much total interest is paid in the sixth year?

Give the answer in

thousands of dollars without decimal places, rounding to the nearest thousand

(e.g., if the answer would be $54,790.34, give 55; or if the answer would be $54,392.28,

give 54).

Machine Technotronic

costs $2,000,000, has a four-year life with expected salvage value in four years of $716,800, and has pre-tax operating costs of $370,000 per year. Machine

is in Class 8 (CCA rate of 20 percent per year, Accelerated Investment Incentive

in the first year is applied). If your tax rate is 35 percent and your discount

rate is 19 percent, compute the EAC (equivalent annual cost) for Machine Technotronic.

Give the answer in

thousands of dollars without decimal places, rounding to the nearest thousand

(e.g., if the answer would be $154,790.34, give 155; or if the answer would be

$154,392.28, give 154).

Justin wants

to have $150,000 in his savings account. If he can invest at 6.9% per year and he

currently has $100,000, how long will it be before he has the desired amount in

his savings account?

Give the answer in

years,