You are the recipient of a gift that will pay you $25,000 one year from now and every year thereafter for the following 24 years. The payments will increase in value by 2.5 percent each year. If the appropriate discount rate is 8.5 percent, what is the present value of this gift?

The stock in Up-Towne Movers is selling for $45.80 per share. Investors have a required return of 10.8 percent and expect the dividends to grow at 4.2 percent indefinitely. What was the dividend the company just paid?

You purchased a 10-year bond at par value when it was originally issued. It has an annual coupon of 5 percent and matures five years from now. Coupons are paid semiannually. Which one of the following statements applies to this bond if the relevant market interest rate is now 4.7 percent?

George Jefferson established a trust fund that will provide $212,500 per year in scholarships. The trust fund earns an annual return of 3.5 percent. How much money did Mr. Jefferson contribute to the fund assuming that only income is distributed?

Aidan can afford $240 a month for five years for a car loan. If the interest rate is 8.5 percent, what is the most he can afford to borrow?

Sankey Company has earnings per share of $3.65. The benchmark PE is 18.2 times. What stock price would you consider appropriate?

A zero coupon bond:

Rahul is scheduled to receive annual payments of $3,600 for each of the next 12 years. The discount rate is 8 percent. What is the difference in the present value if these payments are paid at the beginning of each year rather than at the end of each year?

A company has net working capital of $1,726. If all its current assets were liquidated, the company would receive $5,663. What are the company’s current liabilities?

Crossfade Corporation has a bond with apar value of $2,000 that sells for $1,877.04. The bond has a coupon rate of 6.45 percent and matures in 11 years. If the bond makes semiannual coupon payments, what is the YTM of the bond?