Fi 515 Week6 Exam Essay

946 WordsOct 4, 20134 Pages
Top of Form Grading Summary These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. Date Taken: 10/13/2013 Time Spent: 2 h , 49 min , 52 secs Points Received: 52 / 100 (52%) Question Type: # Of Questions: # Correct: Multiple Choice 9 5 Essay 1 N/A Grade Details - All Questions 1. Question : (TCO D) A stock just paid a dividend of D0 = $1.50. The required rate of return is rs = 10.1%, and the constant growth rate is g = 4.0%. What is the current stock price? Student Answer: $23.11 $23.70 $24.31 $24.93 $25.57 Instructor Explanation: Chapter 7 D0…show more content…
Student Answer: 12.60% 13.10% 13.63% 14.17% 14.74% Instructor Explanation: Chapter 9 Bond yield 8.75% Risk premium 3.85% rs = rd + Risk premium 12.60% Points Received: 10 of 10 Comments: 7. Question : (TCO F) Cornell Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's expected NPV can be negative, in which case it will be rejected. WACC: 10.00% Year 0 1 2 3 ----------------------------------------------- Cash flows -$1,050 $450 $460 $470 Student Answer: $ 92.37 $ 96.99 $101.84 $106.93 $112.28 Instructor Explanation: Chapter 10 WACC: 10.00% Year 0 1 2 3 Cash flows -$1,050 $450 $460 $470 NPV = $92.37 Points Received: 10 of 10 Comments: 8. Question : (TCO F) Simkins Renovations Inc. is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's IRR can be less than the WACC (and even negative), in which case it will be rejected.

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