$1.$ How much would $$40,000$ due in $30$ years be worth today if the discount rate were $5\mathrm{.}5\%?$ Identify N$,$ PV$,$ FV$,$ PMT$,$ and I$/$R$,$ and include the formula for calculating the answer. $(2$ pts$)$

$2.$ You have just purchased an outstanding $10-$year bond with a par value of $$1,000$ for $$925\mathrm{.}50.$ Its annual coupon payment is $$70.$

a$.$ What is the Coupon rate? $(2$ pts$)$

b$.$ What is the bond's yield to maturity? $(2$ pts$)$

$3.$ If you want to save $$50,000$ in $8$ years, you will earn $6\mathrm{.}5\%$ on your investment.

a$.$ How much will your payments be annually? $(2$ pts$)$

b$.$ Identify N$,$ PV$,$ FV$,$ PMT$,$ and I$/$R$,$ as well as the formula used to calculate the payment. $(1$ pt$)$

$4.$ You were hired as a consultant to Rios Tech Company $($Rios$),$ whose target capital structure is $35\%$ debt, $10\%$ preferred, and $55\%$ common equity. The interest rate on new debt is $6\mathrm{.}50\%,$ the yield on the preferred is $6\mathrm{.}00\%,$ the cost of retained earnings is $10\mathrm{.}50\%,$ and the tax rate is $25\%.$ The firm will not be issuing any new stock.

a$.$ What is Rios's WACC? Round the final answer to two decimal places. Do not round your intermediate calculations. $(4$ pts$)$

b$.$ Provide the formula. $(1$ pt$)$

$5.$ Gila Enterprises is considering a project with the following cash flow and WACC data.

WACC: $10\mathrm{.}00\%$

Year $0123$

Cash Flows $-$$$825$ $$450$ $$460$ $$470$

a$.$ What is the project's NPV$?$ Note that a project's projected NPV can be negative, which will be rejected. $(4$ pts$)$

b$.$ Provide the formula for calculating the NPV$.(1$ pt$)$

$6.$ Fund L has the following information for Stocks A$,$ B$,$ and C$.$ The returns on the three stocks are positively correlated but not perfectly correlated. $($That is$,$ each correlation coefficient is between $0$ and $1.)$

Stock Expected Return Standard Deviation Beta

A $9\mathrm{.}55\%15\%0\mathrm{.}9$

B $10\mathrm{.}45\%15\%1\mathrm{.}1$

C $12\mathrm{.}7\%15\%1\mathrm{.}6$

Fund L has one$-$third of its funds invested in the three stocks. The risk$-$free rate is $5\mathrm{.}5\%,$ and the market is in equilibrium. $($That is$,$ required returns equal expected returns.$)$

What is the beta of Fund L$?(2$ pts$)$

$7.$ What concept$($s$)$ is$/$were the most important discussed during the class? $(2$ pts$)$

$8.$ How will you use the knowledge you gained in this course $($either professionally or personally$)?(2$ pts$)$ Gila Enterprises is considering a project with the following cash flow and WACC data.

WACC: $10\mathrm{.}00\%$

a$.$ What is the project's NPV$?$ Note that a project's projected NPV can be negative,

which will be rejected. $(4$ pts$)$

b$.$ Provide the formula for calculating the NPV$.(1$ pt$)$

Fund $L$ has the following information for Stocks $A,B,$ and $C.$ The returns on the three

stocks are positively correlated but not perfectly correlated. $($That is$,$ each correlation

coefficient is between $0$ and $1.$