GAMA Corp is considering a project that will produce cash inflows

Subject: Business / Finance
Question

GAMA Corp is considering a project that will produce cash inflows of $6,000 a year for 2 years with a final cash inflow of $12,000 in year 3. The project’s initial cost is $18,500. What is the net present value of this project if the required rate of return is 10 percent?

929.00

1,167.54

427.56

-1,083.34

1,052.67

2.5 points

QUESTION 22

Neptune Inc.’s bonds currently sell for $1,200 and have a par value of $1,000. They pay a $110 annual coupon and have a 10 years to maturity, but they can be called in 3 years at $1,120. What is their yield to call (YTC)?

6.20%

7.09%

7.98%

7.54%

8.28%

2.5 points

QUESTION 23

Shares of common stock of the Lowes Co. offer an expected total return of 19%. The dividend is expected to grow at a constant 7% per year. The dividend yield must be:

7.00%

26.00%

-7.00%

12.00%

19.00%

2.5 points

QUESTION 24

Interest rates on 2-year Treasury securities are currently 7%, while 4-year securities yield 8.0%. If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 2 years from now?

15.00%

9.00%

7.50%

4.00%

3.50%