Susan recently received a credit card with a nominal interest rate of 22 percent.  With the card, she purchased some new clothes for $275.  The minimum payment on the card is only $20 per month.  If Susan makes the minimum monthly payment and makes no other charges, how long will it be before she pays off the card?

A firm’s bonds have a maturity of 25 years with a $1,000 face value, a 12 percent semiannual coupon, are callable in 7 years at $1,100, and currently sell at a price of $1,167.  What is their yield to call (YTC)?

What is the present value of an annuity due that pays $1,100 per year for 8 years, assuming the annual discount rate is 4 percent?

Leslie Foods is considering the following independent projects for the coming year: Project RequiredInvestment ExpectedRate of Return Risk X $7 million 10.5% High Y   5 million   8.5% Average Z   4 million   8.5% Low Leslie’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 Leslie accept assuming it faces no capital constraints?

A firm with a 13 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: -$14,000 $5,000 $5,200 $6,700 $5,500 Calculate the project’s discounted payback period.

What is the present value of a perpetuity that pays $1,500 per year if the discount rate is 8.5 percent?

Suppose you invest $3,200 today in an account that earns a nominal annual rate (inom) of 12 percent, with interest compounded monthly.  How much money will you have after 10 years?

Joe plans to retire in 15 years.  He currently has saved up $400,000, and he believes he will need $1,000,000 at retirement.  What annual interest rate must Joe earn to reach his goal, assuming he does not save any additional funds between now and retirement?

What is the present value of a security that will pay $6,000 in 10 years if securities of equal risk pay 11 percent annually?

Your client is 25 years old, and she wants to begin saving for retirement, with the first payment to come one year from now.  She can save $5,500 per year, and you advise her to invest it in securities which you expect to provide an average annual return of 11 percent.  If she follows your advice, how much money would she have at age 70?