23. You want to establish a trust fund that will provide $50,000 a year forever for your kid. If the fand can earn a guaranteed rate of return of 5 percent, how much must you deposit in a lump sum to establish this trust? A $1,000,000 B. $3,500,000 C. $2,700,000. D. $10,555,555 24. Your company capital structure includes equity and debt only. If total assets amount to $10,000, while equity is valued at $3,000; what would its WACC be if the return on equity and cost of debt are respectively 9 percent and 4 percent? (Assume the tax rate is 21 percent) A. 11.11% B. 26.14% C 37,00% D. 18.77% 25. You are considering a 3-year job offer with annual salaries of $48,000, $51,000, and $55,000 a year for the next three years, respectively. The offer also includes a starting bonus of $2,500 payable immediately. What is this offer worth to you today at a discount rate of 6.5 percent? A $138, 066.74 B. $174,383.56 C. $192,283.56 D. $201,111.02 26. A firm has a dividend at time 0 of $1.50. You want to value the stock of that firm using a 3-stage approach with growth assumptions of 30% for the first 3 years, followed by 20% for the next two years, and a long-term growth assumption of 6% thereafter. If you assume a required rate of 13.73 percent, what would the price of that stock be? A $29.71 B. $30.88 C. $40.84 D. $44.95 27. The last 2 keystrokes to find your monthly mortgage payment on a financial calculator are: A. 2 & PV B. PV & CPT C. CPT & PMT D. PMT & N 28. A debt instrument indicating that a corporation has borrowed a certain amount of money and promises to repay it in the future under clearly defined terms is called a(n), A common stock B. corporate bond C. indenture D. preferred stock 29. You own 200 shares of DBO, Inc. at the current price of $15/ share. You borrow $1,000 at 9% to purchase more shares. How many shares would you have in total and what would your personal debt-equity ratio be respectively? A. 266/25.00% B. 20.00%/266 C. 266/33.33% D. 266/27.21 % 30. What is the main advantage of issuing debt instead of equity for financing? A. Debt is more expensive than equity B. The interest tax shield C. The double-taxation of corporation D. Debt doesn't have to be repaid