Which one of the following bonds has the LEAST amount of interest rate risk?

Suppose that you have just purchased a share of stock for $50. The most recent dividend was $2 and dividends are expected to grow at a rate of 3% indefinitely. What must your required return be on the stock?

In capital budgeting analysis, the “bid price” can be defined as:

The following two bonds (A and B) make semi-annual payments. They are both identical, except for the coupon rate. What is the price of bond B?  Note: find bond A’s missing yield to maturity (YTM) first, use it for bond B’s YTM, then find bond B’s price. All variables have to be entered in half-year terms! Do not round you intermediate answers.                                                                         Bond A           Bond B                         Face Value                        $1,000             $1,000                         Coupon Rate as APR        10%                8%                         Years to maturity                  25                  25                         Price                            $1,200.00                    ?

Suppose that you have just purchased a share of stock for $75. The most recent dividend was $5 and dividends are expected to grow at a rate of 2% indefinitely. What must your required return be on the stock?

In comparing two projects using a NPV profile, at the point where the net present values of the projects involved are equal, ________.

The financial manager can rely on both the IRR and the NPV for project selections when: 

What is the payback period of a $10,000 investment with the following cash flows? Year                              1                2              3              4                       Cash Flow            +$3,000      +$4,000    +$5,000    +$6,000    

Which of the following is true with regards to special cases in capital budgeting? I)  Setting the bid price requires finding the sales price point at which the project NPV is equal to zero. II)  In a cost-cutting proposal the reduction in costs has the same effect as an increase in sales.  III) The equivalent annual cost (EAC) is used to evaluate mutually exclusive projects with different economic lives if the projects are expected to be continuously replicated.

Which one of the following is a disadvantage of the discounted payback method?