Reference no: EM131014086

1) What is the present value of a $9,800 ordinary perpetuity is the applicable discount rate is 7%?

a) $140,000.00

b) $9,158.88

c) $10,486.00

d) $1,400

2) Calculate the present value of a delayed perpetuity of $890 that starts with the first cash flow at the end of year 7 if the applicable discount rate is 11%.

a) $8,090.91

b) $4,325.73

c) $3,897.05

d) $8,980.91

3) What is the present value of a $20,000 perpetuity due if the applicable discount rate is 6%?

a) $333,333.33

b) $353,333.33

c) $38,867.92

d) $20,000

4) What is the present value of a growing perpetuity that starts with $1,280 at the end of year one and grows by 4.6% per year in perpetuity if the applicable discount rate is 8%?

a) $37,647.06

b) $39,378.82

c) $16,000.00

d) $40,658.82

5) An investment opportunity promises to make an annual payment that starts at $2,400 exactly one year from today and grows at a constant rate of 4% per year in perpetuity. If the required rate of return on this growing perpetuity is 12%. How much would it be worth today?

a) $2,142.86

b) $2,400

c) $30,000

d) $20,000

6) What is the present value today of a 6-year, $2,800 ordinary annuity if the applicable interest rate is 7%?

a) $16,800

b) $2,616.82

c) $46,666.67

 

d) $13,346.31