WGU C214 Finance Management PVCC updated
questions with verified answers
A bond pays $27.50 semiannually, matures in 9 years, and is currently priced at
$1,090.
What is the yield to maturity for this bond? Ans✓✓✓ 4.28%
A bond that matures in 30 months is sold at a premium.What is the yield to
maturity (YTM)?
Higher than the coupon rate
Equal to the coupon rate
Lower than the coupon rate
Not enough information to determine YTM Ans✓✓✓ Lower than the coupon rate
A broker is considering buying a dividend-paying stock. The dividend will be paid
at the end of the year. The analyst consensus is the stock will be worth $36 in one
year. The company pays a $2.25 annual dividend (ex dividend date is not a
consideration, the broker will receive the full $2.25), and the broker expects a
12% rate of return.
What is the highest price the broker should be willing to pay for stock? Ans✓✓✓
$34.15
A broker is considering purchasing common stock in a company that has average
but consistent operating performance.
, Which factor should lead the broker to purchase shares in this company?
Ans✓✓✓ The current price of the stock is 25% below its intrinsic value
A company has a before-tax cost of common equity of 14%, a pre-tax cost of debt
6%, a cost of preferred equity 8%, and a marginal tax rate of 34%. The current
market value of the company is $150 million, with $75 million common equity,
$50 million debt, and $25 million preferred equity.
What will the company's weighted average pre-tax cost of capital be? Ans✓✓✓
9.7%
A company has a market value of $500 million.
It has a market value of equity of $200 million, a market value of long-term debt
of $150 million.
The cost of equity is 12%, the cost of long -term debt is 8%, and the cost of short-
term debt is 6%. The marginal tax rate is 35%.
What is the weighted average per-tax cost of capital (WACC) for this company?
Ans✓✓✓ 9%
A company is preparing a pro forma balance sheet. The company forecast $10
million in projected sales. The projected cash needed 6% of sales, AR are 19% of
sales, and PP&E are 50% of sales. Accounts payable has been 12% of sales,
historically. Shareholders equity is $1.5 million. Pro forma income is $3.6 million.
The company has no long-term debt.
questions with verified answers
A bond pays $27.50 semiannually, matures in 9 years, and is currently priced at
$1,090.
What is the yield to maturity for this bond? Ans✓✓✓ 4.28%
A bond that matures in 30 months is sold at a premium.What is the yield to
maturity (YTM)?
Higher than the coupon rate
Equal to the coupon rate
Lower than the coupon rate
Not enough information to determine YTM Ans✓✓✓ Lower than the coupon rate
A broker is considering buying a dividend-paying stock. The dividend will be paid
at the end of the year. The analyst consensus is the stock will be worth $36 in one
year. The company pays a $2.25 annual dividend (ex dividend date is not a
consideration, the broker will receive the full $2.25), and the broker expects a
12% rate of return.
What is the highest price the broker should be willing to pay for stock? Ans✓✓✓
$34.15
A broker is considering purchasing common stock in a company that has average
but consistent operating performance.
, Which factor should lead the broker to purchase shares in this company?
Ans✓✓✓ The current price of the stock is 25% below its intrinsic value
A company has a before-tax cost of common equity of 14%, a pre-tax cost of debt
6%, a cost of preferred equity 8%, and a marginal tax rate of 34%. The current
market value of the company is $150 million, with $75 million common equity,
$50 million debt, and $25 million preferred equity.
What will the company's weighted average pre-tax cost of capital be? Ans✓✓✓
9.7%
A company has a market value of $500 million.
It has a market value of equity of $200 million, a market value of long-term debt
of $150 million.
The cost of equity is 12%, the cost of long -term debt is 8%, and the cost of short-
term debt is 6%. The marginal tax rate is 35%.
What is the weighted average per-tax cost of capital (WACC) for this company?
Ans✓✓✓ 9%
A company is preparing a pro forma balance sheet. The company forecast $10
million in projected sales. The projected cash needed 6% of sales, AR are 19% of
sales, and PP&E are 50% of sales. Accounts payable has been 12% of sales,
historically. Shareholders equity is $1.5 million. Pro forma income is $3.6 million.
The company has no long-term debt.
