Reference no: EM132584817

Question 1: John wants to compute the inflation rate implied by Stock A's returns over the prior year. During this period, Stock A provided a nominal and real rate of return of 14.84% and 6.65%, respectively. (John knows the rough approximation of the inflation rate is 8.19%, but would like a more precise estimate.)

A. 8.89%

B. 7.68%

C. 8.03%

D. 9.12%

Question 2: What is the weighted-average cost of capital for a firm with a debt to equity ratio of 65/50; 8% pre-tax cost of debt, 15% cost of equity, and 21% tax-rate

A. 13.80%

B. 9.94%

C. 10.09%

D. 10.45%

Question 3: You deposit $35,000 in a 5-year CD. The CD pays 9.5 percent per year compounded semi-annually. What is the Future Value of your deposit after 5 years?

A. $38,325.00

B. $55,668.00

C. $51,625.00

D. $55,098.00

Question 4: You invest $1,000 in a 2-year project with annual cash flows of $700 and $700. What is the NPV of this project, assuming a discount rate of 15 percent?

A. $308.70

B. -$308.70

C. $138.00

D. -$138.00

Question 5: What is the percentage return on a stock that was purchased for $48.40, paid a $1.67 dividend, and was then sold after one year for $46.20?

A. -2.5%

B. -1.10%

C. 0.23%

D. -0.33%

Question 6: The capital budgeting analysis focuses on cash flows not profits, and a reduction in net operating working capital increases cash flows

A. No and Yes

B. Yes and Yes

C. No and No

D. Yes and No