Questions from Corporate Finance


Q: What annual rate of return is earned on a $4,

What annual rate of return is earned on a $4,000 investment made in year 2 when it grows to $6,500 by the end of year seven?

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Q: A preferred stock from Hecla Mining Co. (HLPRB) pays

A preferred stock from Hecla Mining Co. (HLPRB) pays $3.50 in annual dividends. If the required return on the preferred stock is 6.8 percent, what is the value of the stock?

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Q: What annual rate of return is implied on a $2,

What annual rate of return is implied on a $2,500 loan taken next year when $3,500 must be repaid in year 4?

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Q: Ten years ago, Hailey invested $2,000 and locked

Ten years ago, Hailey invested $2,000 and locked in a 9 percent annual interest rate for 30 years (end 20 years from now). Aidan can make a 20-year investment today and lock in a 10 percent interest r...

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Q: Ten years ago, Hailey invested $3,000 and locked

Ten years ago, Hailey invested $3,000 and locked in an 8 percent annual interest rate for 30 years (end 20 years from now). Aidan can make a 20-year investment today and lock in a 10 percent interest...

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Q: You are scheduled to receive a $500 cash flow in one

You are scheduled to receive a $500 cash flow in one year, a $1,000 cash flow in two years, and pay an $800 payment in three years. If interest rates are 10 percent per year, what is the combined pres...

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Q: At age 30 you invest $1,000 that earns 8

At age 30 you invest $1,000 that earns 8 percent each year. At age 40 you invest $1,000 that earns 12 percent per year. In which case would you have more money at age 60?

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Q: You own $10,000 of Denny’s Corp stock that has

You own $10,000 of Denny’s Corp stock that has a beta of 2.9. You also own $15,000 of Qwest Communications (beta = 1.5) and $5,000 of Southwest Airlines (beta = 0.7). Assume that the market return wil...

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Q: Suppose a firm has had the historic sales figures shown as follows

Suppose a firm has had the historic sales figures shown as follows. What would be the forecast for next year’s sales using the naïve approach?

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Q: A deposit of $350 earns the following interest rates:

A deposit of $350 earns the following interest rates: • 8 percent in the first year, • 6 percent in the second year, and • 5.5 percent in the third year. What would be the third year future value?

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