1. Payback, Discounted Payback, NPV & IRR GS is looking at a new project with the following cash flows Year Cash Flow 0($153,000) 1 78,000 2 67,000 3 49,000 Using the – Payback Period – Discounted Payback Period – NPV – IRR

2. Non-constant Growth ABC company is a start up company that does not pay any dividends. However investors expect them to start paying in 2 years with the first dividend expected to be $5. After that the dividends are expected to grow at a 20% rate for three years, and then grow at a constant rate of 5%, if the stock’s required return is 10%, what is the price you would be willing to pay today for the stock?

3. Coupon Rate A $1,000 face value bond is currently quoted at 102. The bond pays semiannual payments of $30.00 each and matures in six years. What is the coupon rate? (10 points)

4. Returns and Standard Deviations Based on the following information, calculate the expected return and Standard deviation for the two Stocks. State of the ProbabilityRate of Return if State Occurs EconomyStock AStock B Recession.15.02(.30) Normal.55.10.18 Boom.30.15.31