FIN 515 Devry entire course DEVRY FIN 515 Final Exam 5 Sets | Page 2

(TCO D) A stock has just declared an annual dividend of $2.25 to be paid one year
from today. The dividend is expected to grow at a 7% annual rate. The return on
equity for similar stocks is 12%. What is P0? (Points : 20)
(TCO D) A particular bond has 8 years to maturity. It has a face value of $1,000. It has
a YTM of 7% and the coupons are paid semiannually at a 10% annual rate. What
does the bond currently sell for? (Points : 10)
(TCO D) A bond currently sells for $1,000 and has a par of $1,000. It was issued two
years ago and had a maturity of 10 years. The coupon rate is 7% and the interest
payments are made semiannually. What is its YTM? (Points : 10)
(TCO D) Using examples, explain the difference between systematic risk and
nonsystematic risk. Explain why the distinction is important for both investors and
issuers of stock.(Points : 30)
(TCO E) A company has 10 million shares outstanding trading for $7 per share. It also
has $300 million in outstanding debt. If its equity cost of capital is 15%, and its debt
cost of capital is 9%, and its effective corporate tax rate is 40%, what is its weighted
average cost of capital? (Points : 30)
(TCO A) Relate how the job of the financial manager can be explained using the
balance sheet. (Points : 25)
(TCO H) Other things being equal, would a firm prefer a longer or shorter Cash
Conversion Cycle? What are some examples of ways a firm could attain this? (Points :
30)
(TCO F) A company has the opportunity to do any of the projects for which the net
cash flows per year are shown below. The company has a cost of capital of 12%.
Which should the company do and why? You must use at least two capital budgeting
methods. Show your work