FIN 571 WEEK 4 Multiple Choice Question

FIN 571 WEEK 4 Multiple Choice Question 
 
Question 66 

 	 
Present value: Tommie Harris is considering an investment that pays 6.5 percent annually. How much must he invest today such that he will have $25,000 in seven years? (Round to the nearest dollar.)

 
$38,850
 
$26,625
 
$16,088
 
$23,474
Multiple Choice Question 61
 
 
 	 
PV of multiple cash flows: Jack Stuart has loaned money to his brother at an interest rate of 5.75 percent. He expects to receive $625, $650, $700, and $800 at the end of the next four years as complete repayment of the loan with interest. How much did he loan out to his brother? (Round to the nearest dollar.)

 
$2,404
 
$2,545
 
$2,713
 
$2,250
Multiple Choice Question 63
 
 
 	 
PV of multiple cash flows: Hassan Ali has made an investment that will pay him $11,455, $16,376, and $19,812 at the end of the next three years. His investment was to fetch him a return of 14 percent. What is the present value of these cash flows? (Round to the nearest dollar.)

 
$36,022
 
$41,675
 
$39,208
 
$33,124
Multiple Choice Question 65
 
 
 	
 	 
PV of multiple cash flows: Pam Gregg is expecting cash flows of $50,000, $75,000, $125,000, and $250,000 from an inheritance over the next four years. If she can earn 11 percent on any investment that she makes, what is the present value of her inheritance? (Round to the nearest dollar.)

 
$361,998
 
$412,372
 
$434,599
 
$309,432
Multiple Choice Question 66
 

 	 
Present value of an annuity: Transit Insurance Company has made an investment in another company that will guarantee it a cash flow of $37,250 each year for the next five years. If the company uses a discount rate of 15 percent on its investments, what is the present value of this investment? (Round to the nearest dollar.)

 
$251,154
 
$124,868
 
$101,766
 
$186,250
Multiple Choice Question 71
 
 
 	
 	 
Future value of an annuity: Carlos Menendez is planning to invest $3,500 every year for the next six years in an investment paying 12 percent annually. What will be the amount he will have at the end of the six years? (Round to the nearest dollar.)

 
$24,670
 
$26,124
 
$21,000
 
$28,403
Multiple Choice Question 61
 
 
 	 
Bond price: Briar Corp is issuing a 10-year bond with a coupon rate of 7 percent. The interest rate for similar bonds is currently 9 percent. Assuming annual payments, what is the present value of the bond? (Round to the nearest dollar.)

 
$872
 
$945
 
$990
 
$1,066
Multiple Choice Question 56
 
 
 	 
PV of dividends: Cortez, Inc., is expecting to pay out a dividend of $2.50 next year. After that it expects its dividend to grow at 7 percent for the next four years. What is the present value of dividends over the next five-year period if the required rate of return is 10 percent?

 
$10.76
 
$11.88
 
$9.80
 
$11.50
ultiple Choice Question 59
 

PV of dividends: Givens, Inc., is a fast growing technology company that paid a $1.25 dividend last week. The company's expected growth rates over the next four years are as follows: 25 percent, 30 percent, 35 percent, and 30 percent. The company then expects to settle down to a constant-growth rate of 8 percent annually. If the required rate of return is 12 percent, what is the present value of the dividends over the fast growth phase?

 
$1.25
 
$6.46
 
$8.37
 
$7.24