Graduate Level Corporate Fianance Homework Questions (5 total)

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1. Trigen Corp. management will invest cash flows of $331,000,
$616,450, $212,775,
$818,400, $1,239,644, and $1,617,848 in research and development over the next
six years. If the appropriate interest rate is 6.75
percent, what is the future value of these investment cash flows six years
from today? (Round
answer to 2 decimal places, e.g. 15.25.) what is the future value?

2. You wrote a piece of software that does a better job of allowing
computers to network than any other program designed for this purpose. A
large networking company wants to incorporate your software into their
systems and is offering to pay you $500,000 today, plus $500,000 at the
end of each of the following six years for permission to do this. If
the appropriate interest rate is 6 percent, what is the present value
of the cash flow stream that the company is offering you? (Round answer to the nearest whole dollar, e.g. 5,275.) what is the present value?


Barbara is considering investing in a stock and is aware that the return on
that investment is particularly sensitive to how the economy is performing.
Her analysis suggests that four states of the economy can affect the return on
the investment. Using the table of returns and probabilities below, find

Probability Return

Boom 0.1 25.00%
Good 0.4 15.00%
Level 0.3 10.00%
Slump 0.2 -5.00%

What is the expected return on Barbara’s investment? (Round
answer to 3 decimal places, e.g. 0.076.)

4. Trevor Price bought 10-year bonds issued by Harvest Foods five years ago
for $936.05. The bonds make semiannual coupon payments at a rate of 8.4
percent. If the current price of the bonds is $1,048.77, what is the
yield that Trevor would earn by selling the bonds today? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.)  what is the effective annual yield %?

5. The First Bank of Ellicott City has issued perpetual preferred stock with a
$100 par value. The bank pays a quarterly dividend of $1.65 on this stock.
What is the current price of this preferred stock given a required rate of
return of 11.6
percent? (Round
answer to 2 decimal places, e.g. 15.25.)
what is the current price?