Question: 1. UNEQUAL LIVES The NPV (required return is 10%) using the replacement chain approach for Project B for 4 years is a. $66,718 $75,000 c.

1. UNEQUAL LIVES

The NPV (required return is 10%) using the replacement chain approach for Project B for 4 years is

a. $66,718 $75,000 c. $61,787 d. None

T CASH FLOW PROJECT A CASH FLOW PROJECT B

0 (200,000) (80,000)

1 90,000 60,000

2 90,000 75,000

3 90,000

4 90,000

NPV $85,288

2. PREFERRED STOCK

The required return on a preferred stock with a $100 par value that has an annual dividend of 12% is currently 11%. What is the current market price?

(Rps = Div / Price)

a. $100 b. $109 c. $92 d. $88.35

3. BOND PROBLEM

What is the approximate yield to maturity for a $1000 par bond selling for $1200 that matures in 10 years and has a coupon interest rate of 12%?

a. 8.9% b. 12.7% c. 12% d. 14.2%

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