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# A three-year bond has 8.0% coupon rate and face value of \$1000.

A three-year bond has 8.0% coupon rate and face value of \$1000. If the yield to maturity on the bond is 10%, calculate the price of the bond assuming that the bond makes semi-annual coupon interest payments.
\$857.96
\$949.24
\$1057.54
\$1000.00

Casino Inc. is expected to pay a dividend of \$6 per share at the end of year one and these dividends are expected to grow at a constant rate of 6% per year forever. If the required rate of return on the stock is 18%, what is current value of the stock today?
\$30
\$50
\$100
\$54

Dividend growth rate for a stable firm can be estimated as ______.
Plow back rate / the return on equity (ROE)
Plow back rate * the return on equity (ROE)
Plow back rate + the return on equity (ROE)
Plow back rate - the return on equity (ROE)

Great Motor Company is currently paying a dividend of \$1.50 per year. The dividends are expected to grow at a rate of 20% for the next three years and then a constant rate of 6 % thereafter. What is the expected dividend per share in year 5?
\$2.91
\$2.59
\$2.00
\$1.50

Company X has a P/E ratio of 10 and a stock price of \$50 per share. Calculate earnings per share of the company.
\$6 per share
\$10 per share
\$0.20 per share
\$5 per share

The following measures are used by firms when making capital budgeting decisions except ______.
payback period
internal rate of return
P/E ratio
net present value

Which of the following investment rules may not use all possible cash flows in its calculations?
NPV
payback period
IRR
all of the above

Given the following cash flows for project A: C0 = -2000, C1 = +600 , C2 = +1400 and C3 = +5000, calculate the payback period.
three years
two years
one year
none of the above

Driscoll Company is considering investing in a new project. The project will need an initial investment of \$2,400,000 and will generate \$1,200,000 (after-tax) cash flows for three years. Calculate the NPV for the project if the cost of capital is 15%.
\$169,935
\$1,200,000
\$339,870
\$125,846

Preferably, cash flows for a project are estimated as ______.
cash flows after taxes
cash flows before taxes
accounting profits before taxes
accounting profits after taxes

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