Warr Company is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's projected IRR can be less than the WACC or negative, in both cases, it will be rejected.

 

Year	Cash flows
0	-1,415
1	400
2	400
3	400
4	400

 

 

a. 5.61%

b. 5.00%

c. 3.98%

d. 5.10%

 

Generally, high growth stocks pay:

Multiple Choice

A. low or no dividends.

B. high, steadily growing dividends.

C. erratic dividends.

D. decreasing dividends.

A 10-year bond pays an annual coupon, its YTM is 8%, and it currently trades at a premium. Which of the following statements is CORRECT?

One-year Treasury securities yield 5%. The market anticipates that 1 year from now, 1-year Treasury securities will yield 6%. If the pure expectations theory is correct, what is the yield today for 2-year Treasury securities? Calculate the yield using a geometric average.

A man buys a corporate bond from a bond brokerage house for $925. The bond has a face value of $1000 and pays 4 percent of its face value each year. If the bond will be paid off at the end of 10 years, what rate of return will the main receive?