Kuhn Microcomputers is considering the following independent projects for the coming year: Project RequiredInvestment ExpectedRate of Return Risk X $8 million 12.5% High Y   6 million   9.0% Average Z   3 million   7.5% Low Kuhn’s WACC is 10 percent, but it adjusts for risk by adding 2 percent to the WACC for high-risk projects and subtracting 2 percent for low-risk projects.  Which project(s) should Kuhn accept assuming it faces no capital constraints?

Bill plans to retire in 24 years.  He currently has saved up $200,000, and he believes he will need $1,000,000 at retirement.  What annual interest rate must Bill earn to reach his goal, assuming he does not save any additional funds between now and retirement?

An investment will pay $900 at the end of each of the next 3 years, $1,100 at the end of Year 4, and $1,400 at the end of Year 5.  What is its present value if other investments of equal risk earn 8 percent annually?

The problem of multiple IRRs generally occurs when:

An investment will pay $600 at the end of each of the next 2 years, $500 at the end of Year 3, and $600 at the end of Year 4.  What is its present value if other investments of equal risk earn 9 percent annually?

A firm with a 10 percent cost of capital is considering a project for this year’s capital budget.  The project’s expected after-tax cash flows are as follows: Year: 0 1 2 3 4 Cash flow: -$12,000 $5,400 $5,600 $4,100 $5,000 Calculate the project’s discounted payback period.

An annual coupon bond that matures in 20 years sells for $1,365.14.  It has a face value of $1,000 and a yield to maturity of 9 percent.  What is its current yield (CY)?

An annual coupon bond that matures in 17 years sells for $759.35.  It has a face value of $1,000 and a yield to maturity of 10 percent.  What is its current yield (CY)?

An investment will pay $900 at the end of each of the next 4 years, $800 at the end of Year 5, and $600 at the end of Year 6.  What is its present value if other investments of equal risk earn 9 percent annually?

Steve plans to retire in 20 years.  He currently has saved up $150,000, and he believes he will need $1,000,000 at retirement.  What annual interest rate must Steve earn to reach his goal, assuming he does not save any additional funds between now and retirement?