Finance 301 Final Exam practice ACTUAL
EXAM 2026/2027 COMPLETE QUESTIONS
WITH CORRECT DETAILED ANSWERS ||
GUARANTEED PASS
1. Ella buys a stock for $26.00. After one year, the stock price is $29.90 and
she receives a dividend of $0.80. What is her return for the period? -
ANSWER ✅ 18.08%
2. You have chosen biology as your college major because you would like to
be a medical doctor. However, you find that the probability of being
accepted to medical school is about 10 percent. If you are accepted to
medical school, then your starting salary when you graduate will be
$300,000 per year. However, if you are not accepted, then you would choose
to work in a zoo, where you will earn $40,000 per year. Without considering
the additional years you would spend in school if you study medicine or the
time value of money, what is your expected starting salary as well as the
standard deviation of that starting salary? - ANSWER ✅ $66,000 , $78,000
3. Stocks A, B, and C have expected returns of 15 percent, 15 percent, and 12
percent, respectively, while their standard deviations are 45 percent, 30
percent, and 30 percent, respectively. If you were considering the purchase
of each of these stocks as the only holding in your portfolio and the risk free
rate is 0 percent, which stock should you choose? - ANSWER ✅ Choose B
4. Riggs Corp. management is planning to spend $650,000 on a new-
marketing campaign. They believe that this action will result in additional
, cash flows of $325,000 over the next three years. If the discount rate is 17.5
percent, what is the NPV on this project? - ANSWER ✅ $62,337
5. Nakamichi Bancorp has made an investment in banking software at a cost of
$1,875,000. Management expects productivity gains and cost savings over
the next several years. If, as a result of this investment, the firm is expected
to generate additional cash flows of $586,212, $713,277, $431,199, and
$318,697 over the next four years, what is the investment's payback period?
- ANSWER ✅ 3.45 years
6. Refer to Problem 10.4. What is the IRR that Franklin Mints management can
expect on this project? - ANSWER ✅ 33.916%
7. Briarcrest Condiments is a spice-making firm. Recently, it developed a new
process for producing spices. The process requires new machinery that
would cost $1,968,450, have a life of five years, and would produce the cash
flows shown in the following table. What is the NPV if the discount rate is
15.9 percent?
Year 1 Cash Flow: $512,496
Year 2 Cash Flow: -$242,637
Year 3 Cash Flow: $814,558
Year 4 Cash Flow: $887,225
Year 5 Cash Flow: $712,642 - ANSWER ✅ -$351,223
8. Suppose that you could invest in the following projects but have only
$30,000 to invest. How would you make your decision and in which projects
would you invest?
Project A-
, Cost= $8,000
NPV= $4,000
Project B-
Cost= $11,000
NPV= $7,000
9. Project C-
Cost= $9,000
NPV= $5,000
Project D-
Cost= $7,000
NPV= $4,000 - ANSWER ✅ B, D, and C
(Total cost = $27,000, NPV = $16,000)
10.A project costs $560 and will generate net cash inflows of $240 for three
years. The discount rate is 12%. Calculate the MIRR of the project. -
ANSWER ✅ 13.09%
11.Management of Draconian Measures, Inc., is evaluating two independent
projects. The company uses a 13.8 percent discount rate for such projects.
, The costs and cash flows for the projects are shown in the following table.
What are their NPVs?
Project 1:
Year 0: -8,425,375
Year 1: 3,225,997
Year 2: 1,775,882
Year 3: 1,375,112
Year 4: 1,176,558
Year 5: 1,212,645
Year 6: 1,582,156
Year 7: 1,365,882
Project 2:
Year 0: -11,368,000
Year 1: 2,112,589
Year 2: 3,787,552
Year 3: 3,125,650
Year 4: 4,115,899
Year 5: 4,556,424 - ANSWER ✅ Project 1= -668,283
Project 2= 375,375
12.The total value of a firm is $4,000,000 and it has $300,000 debt. The cost of
debt is 6% and the cost of equity is 10%. What is the weighted-average cost
of capital (W A C C)? - ANSWER ✅ 9.7%
13.The before-tax cost of debt for a firm is 6% and the marginal tax rate is 20%.
What is the after-tax cost of debt for the firm? - ANSWER ✅ 4.8%
EXAM 2026/2027 COMPLETE QUESTIONS
WITH CORRECT DETAILED ANSWERS ||
GUARANTEED PASS
1. Ella buys a stock for $26.00. After one year, the stock price is $29.90 and
she receives a dividend of $0.80. What is her return for the period? -
ANSWER ✅ 18.08%
2. You have chosen biology as your college major because you would like to
be a medical doctor. However, you find that the probability of being
accepted to medical school is about 10 percent. If you are accepted to
medical school, then your starting salary when you graduate will be
$300,000 per year. However, if you are not accepted, then you would choose
to work in a zoo, where you will earn $40,000 per year. Without considering
the additional years you would spend in school if you study medicine or the
time value of money, what is your expected starting salary as well as the
standard deviation of that starting salary? - ANSWER ✅ $66,000 , $78,000
3. Stocks A, B, and C have expected returns of 15 percent, 15 percent, and 12
percent, respectively, while their standard deviations are 45 percent, 30
percent, and 30 percent, respectively. If you were considering the purchase
of each of these stocks as the only holding in your portfolio and the risk free
rate is 0 percent, which stock should you choose? - ANSWER ✅ Choose B
4. Riggs Corp. management is planning to spend $650,000 on a new-
marketing campaign. They believe that this action will result in additional
, cash flows of $325,000 over the next three years. If the discount rate is 17.5
percent, what is the NPV on this project? - ANSWER ✅ $62,337
5. Nakamichi Bancorp has made an investment in banking software at a cost of
$1,875,000. Management expects productivity gains and cost savings over
the next several years. If, as a result of this investment, the firm is expected
to generate additional cash flows of $586,212, $713,277, $431,199, and
$318,697 over the next four years, what is the investment's payback period?
- ANSWER ✅ 3.45 years
6. Refer to Problem 10.4. What is the IRR that Franklin Mints management can
expect on this project? - ANSWER ✅ 33.916%
7. Briarcrest Condiments is a spice-making firm. Recently, it developed a new
process for producing spices. The process requires new machinery that
would cost $1,968,450, have a life of five years, and would produce the cash
flows shown in the following table. What is the NPV if the discount rate is
15.9 percent?
Year 1 Cash Flow: $512,496
Year 2 Cash Flow: -$242,637
Year 3 Cash Flow: $814,558
Year 4 Cash Flow: $887,225
Year 5 Cash Flow: $712,642 - ANSWER ✅ -$351,223
8. Suppose that you could invest in the following projects but have only
$30,000 to invest. How would you make your decision and in which projects
would you invest?
Project A-
, Cost= $8,000
NPV= $4,000
Project B-
Cost= $11,000
NPV= $7,000
9. Project C-
Cost= $9,000
NPV= $5,000
Project D-
Cost= $7,000
NPV= $4,000 - ANSWER ✅ B, D, and C
(Total cost = $27,000, NPV = $16,000)
10.A project costs $560 and will generate net cash inflows of $240 for three
years. The discount rate is 12%. Calculate the MIRR of the project. -
ANSWER ✅ 13.09%
11.Management of Draconian Measures, Inc., is evaluating two independent
projects. The company uses a 13.8 percent discount rate for such projects.
, The costs and cash flows for the projects are shown in the following table.
What are their NPVs?
Project 1:
Year 0: -8,425,375
Year 1: 3,225,997
Year 2: 1,775,882
Year 3: 1,375,112
Year 4: 1,176,558
Year 5: 1,212,645
Year 6: 1,582,156
Year 7: 1,365,882
Project 2:
Year 0: -11,368,000
Year 1: 2,112,589
Year 2: 3,787,552
Year 3: 3,125,650
Year 4: 4,115,899
Year 5: 4,556,424 - ANSWER ✅ Project 1= -668,283
Project 2= 375,375
12.The total value of a firm is $4,000,000 and it has $300,000 debt. The cost of
debt is 6% and the cost of equity is 10%. What is the weighted-average cost
of capital (W A C C)? - ANSWER ✅ 9.7%
13.The before-tax cost of debt for a firm is 6% and the marginal tax rate is 20%.
What is the after-tax cost of debt for the firm? - ANSWER ✅ 4.8%
