Question
You purchase 100 shares of stock for $50 a share. The stock pays a $2 per share dividend at year-end.
| a. | What is the rate of return on your investment if the end-of-year stock price is (i) $48; (ii) $50; (iii) $54?(Leave no cells blank – be certain to enter “0” wherever required. Enter your answers as a whole percent.) |
| Stock price | Rate of return |
| $48 | % |
| $50 | % |
| $54 | % |
| b. | What is your real (inflation-adjusted) rate of return if the inflation rate is 3%? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Negative amounts should be indicated by a minus sign.) |
| Stock price | Real rate of return |
| $48 | % |
| $50 | % |
| $54 | % |
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Question
A project that costs $3,700 to install will provide annual cash flows of $1,150 for each of the next 6
years.
| Calculate the NPV if the discount rate is 11%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
| Is this project worth pursuing? |
| |
| YesNo |
| How high can the discount rate be before you would reject the project? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) |
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Question
33)Your parents have accumulated a $120,000 nest egg. They have been planning to use this money to pay college costs to be incurred by you and your sister, Courtney. However, Courtney has decided to forgo college and start a nail salon. Your parents are giving Courtney $21,000 to help her get started, and they have decided to take year-end vacations costing $8,000 per year for the next four years. Use 7 percent as the appropriate interest rate throughout this problem. Use Appendix A and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods.
a.How much money will your parents have at the end of four years to help you with graduate school, which you will start then? (Round your final answer to 2 decimal places.)
Funds available for graduate school$ b.You plan to work on a master’s and perhaps a PhD. If graduate school costs $24,060 per year, approximately how long will you be able to stay in school based on these funds? (Round your final answer to 2 decimal places.)
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Question
A worker-machine operation was found to involve 4.2 minutes of machine time per cycle in the course of 40 cycles of stopwatch study. The worker’s time averaged 2.1 minutes per cycle, and the worker was given a rating of 120 percent (machine rating is 100 percent). Midway through the study, the worker took a 10-minute rest break. Assuming an allowance factor of 11 percent of work time which is applied only to the worker element (not the machine element), determine the standard time for this job.
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