Reference no: EM132421227

Question 1. If a company's credit rating is downgraded, what will happen to the price of its bonds?

Question 2. What is do you call a loan that does not require collateral?

Question 3. A project plan has the following forecast results with a WACC of 11%

What is the Net Present Value?

Initial Outlay: -70,000

Year 1 13,000

Year 2 15,000

Year 3 18,000

Year 4 20,000

Year 5 25,000

Question 4. A project has an NPV of 52,000. What does mean as far as acceptance?

Question 5. What is the net present value of expected future cash flows for a share of stock called?

Question 6. What is the internal rate of return given the following information about the project:

Initial Outlay -50,000

Year 1 20,000

Year 2 22,000

Year 3 18,000

Question 7. An investor purchases a share of stock for $82. She sells it in one year for $92 and receives a dividend of $2.95. What is the rate of return the investor achieved?

Question 8. A The expected return for a stock is 10% with a forecast growth rate of 2.5%. The company recently paid a dividend of $3.50. What is the highest price an investor should pay for the stock?

Question 9. In the event of a liquidation who will be paid third? Unsecured creditors, common stockholders, secured creditors, or preferred stockholders.

Question 10. What is the growth in the expected stock price change for a company is trying to value their stock's return in an uncertain economy. (Hint: use the same method for calculating Expected Return for different economic states) They need to use the most likely result for their planning. They estimate a 10% probability that will result in a stock price drop of 7%, a 60% probability for no change in the stock, and a 30% probability for a stock price increase of 15%