# How much did you borrow for your house - Expert Answers

How much did you borrow for your house if your monthly mortgage payment for a 30 year mortgage at 6.65% APR is \$1,600?
A   \$218,080
B \$202,503
C \$186,926
D \$233,658
E \$249,235
F \$264,812

Shady Rack Inchas a bond outstanding with 9.75 percent coupon, paid semiannually, and 17 years to maturityThe market price of the bond is \$1,042.43.Calculate the bond’s yield to maturity (YTM)Now, if due to changes in market conditions, the market required YTM suddenly increases by 2% from your calculated YTM, what will be the percent change in the market price oFthe bond?
-17.09%
B -16.39%
C -17.76%
D -14.01%
E -15.66%
F -14.87%

Sanaponic, Incwill pay a dividend of \$6 for each of the next 3 years, \$8 for each of the years 4-7, and \$10 for the years 8-10 Thereafter, starting in year 11, the company will pay a constant dividend of \$5/year forever If you require 12 percent rate of return on investments in this risk class, how much is this stock worth to you?
\$37.77
\$34.54
\$50.50
\$45.68
\$41.46
\$55.99
Your required rate of return is 15%. What is the net present value of a project with the following cash flows?
Year 0 1 2 3 4 5
Cash Flow -750 450 350 150 125 -100

A 26.33
B 72.15
C 15.56
D 60.27
E 48.68
F 37.37

Please use the following information for this and the following two questions. BB Lean has identified two mutually exclusive projects with the following cash flows.
Year 0 1 2 3 4 5 Cash Flow Project A -52,000.00 18,000.00 17,000.00 15,000.00 12,000.00 9,000.00
Cash Flow Project B
-52,000.00 17,800.00 10,000.00 12,000.00 17,000.00
The company requires a 11.5% rate of return from projects of this risk.  What is the NPV of project A?
A
5,972.87
B 417.37
C 1,395.64
D 1,624.90
E 5,180.35
F 972.57

What is the IRR of project B?
A
B12.06%
12.94%
C 13.05%
D 20.80%
E 13.90%
F 14.68%

At what discount rate would you be indifferent between these two projects?
A3.1177%
B
34.1306%
C 13.5250%
22,000.0
0
D 26.0812%
E 14.7386%
F 15.8950%

A bond with a face value of \$1,000 has annual coupon payments of \$100It was issued 10 years ago and has 7 years remaining to maturityThe current market price for the bond is \$1,000Which of the following is true: Its YTM is 10%IIBond’s coupon rate is 9.5%IIIThe bond’s current yield is 10%.
AI, II  Only
B I, III  Only
C I, II, and III
D III  Only
E I  Only
F II, III  Only

Riverhawk Corporation has a bond outstanding with a market price of \$1,250.00 The bond has 10 years to maturity, pays interest semiannually, and has a yield to maturity of 9% What is the bond’s coupon rate?
A13.61%
B 11.31%
C 9.77%
D 10.54%
E 12.08%
F 12.84%

You purchased a stock for \$20 per shareThe most recent dividend was \$2.50 and dividends are Eexpected to grow at a rate of 8% indefinitelyWhat is your required rate of return on the stock?
A17.64%
B
21.50%
C 17.00%
D 18.38%
E 19.25%
F 20.27%

Sales and profits of Growth Incare expected to grow at a rate of 25% per year for the next six years but the company will pay no dividends and reinvest all earnings. After that, the dividends will grow at a constant annual rate of 7%At the end of year 7, the company plans to pay its first dividend of \$4.00 per shareIf the required return is 16%, how much is the stock worth today?
A\$22.80
B \$15.96
C \$20.52
D \$25.08
E \$18.24
F \$13.68

Apple Sink Inc(ASI) just paid a dividend of \$2.50 per share Its dividends are expected to grow at 26% a year for the next two years, 24% a year for the years 3 and 4, 16% for year 5, and at Aconstant rate of 6% per year thereafter What is the current market value of the ASI’s stock iFcompanies in this risk class have a 16% required rate of return?
A\$56.03
B \$48.35
C \$51.29
D \$45.54
E \$54.27
F \$42.87

The Retarded Company’s dividends are declining at an annual rate of 6 percent The company just paid a dividend of \$4 per share You require a 16 percent rate of return How much will you pay for this stock?
A\$13.85
B \$19.20
C \$17.09
D \$15.33
E F\$12.57
\$21.78

The dividend yield of a stock is 9 percentIf the market price of the stock is \$18 per share and its dividends have been growing at a constant rate of 6%, what was the most recent dividend paid by the company?
A\$1.36
B \$1.53
C \$1.02
D \$1.70
E \$1.19
F
\$0.85
Last year, Jen and Berry Inchad sales of \$45,000, cost of goods sold (COGS) of 12,000, depreciation charge of \$3,000 and selling, general and administrative (SG&A) cost of \$10,000.
The interest costs were \$2,500Twenty percent of SG&A costs are fixed costsIf its sales arEexpected to be \$60,000 this year, what will be the estimated SG&A costs this year?
A\$12,667
B \$12,000
C \$10,636
D \$11,500
E \$14,250
F \$13,250

You require a risk premium of 3.5 percent on an investment in a companyThe pure rate oFinterest in the market is 2.75 percent and the inflation premium is 3 percent US Treasury bills are risk freeWhat should be the yield of the US Treasury bills? Use multiplicative form.
A5.58%
B 6.09%
C 5.06%
D 6.35%
E 5.32%
F 5.83%

Bonds X and Y are identical, including the risk class. The only difference between A and B is in th coupon payment as shown below

Bond X Bond Y
Face value \$1,000 \$1,000
Annual Coupon Payment \$120 \$130
Payment Frequency Semiannual Annual
Years to maturity 15 15
Price \$919.43 ?

What is the price of bond Y?
A\$925.88
B \$940.92
C \$1,007.15
D\$956.95
E\$973.44
F \$989.75