Statements is true of a perpetuity

Assignment Help Financial Management
Reference no: EM131188206

Which of the following statements is true of a perpetuity

A) A perpetuity has a fixed maturity

B) The present value of each payment made by a perpetuity is less than the previous payment

C) The present value of a perpetuity that pays $100 every year when the annual rate of discount is 5% is $1,000

D) The present value of a perpetuity that pays $200 every year when the annual rate of discount is 7% is $1,750

Reference no: EM131188206

Questions Cloud

Spontaneous liabilities to sales ratio-expected net income : Johnson company is expected to increase sales from $6,000,000 to $8,000,000. Total assets will be $3,000,000 at the end of the year. Calculate the following Capital Intensity Ratio, Spontaneous liabilities to sales ratio, expected Net Income over one..
All-equity structure to a levered capital structure for firm : You are writing a comparison of an all-equity structure to a levered capital structure for a firm. It is accurate to state in this comparison that:
Benefit of mutual funds that mainly buy stocks and hold : A benefit of mutual funds that mainly buy stocks and hold them is that
Assume that unsystematic risk is zero : In the CAPM, a stock has a beta coefficient of 0.5. The average returns to all stocks in the market is 8%. If the interest rate on three-month T-bills is at around 3 percent, what is the expected return to this stock? Assume that unsystematic risk is..
Statements is true of a perpetuity : Which of the following statements is true of a perpetuity
Propose an effective strategy : Suppose Supercompany uses all equity for an acquisition. Later, how could it make financial transactions that move it back to its chosen capital structure without necessarily affecting assets at that later date? propose an effective strategy?
What is the dividend payout ratio : Last year, a firm earned $61,200 in net income on sales of $217,600. The company paid $8,500 in dividends. What is the dividend payout ratio? K Toys just paid its annual dividend of $1.50. The required return is 8 percent and the dividend growth rate..
Operations by reduce outstanding stocks : Financial leverage impacts the performance of a firm by: In general, the capital structures used by U.S. firms: Holly's is currently an all equity firm that has 10,000 shares of stock outstanding at a market price of $60 a share. The firm has decided..
Financial leverage impacts the performance of a firm : Ignoring which of the following will cause the NPV of a project to be underestimated? Which one of the following is an example of a real option for a restaurant? Which one of condition indicates a highest level of risk of return? Financial leverage i..

Reviews

Write a Review

Financial Management Questions & Answers

  The three keys to effective portfolio management

The three keys to effective portfolio management are having project leaders with full authority, having a competitive product advantage, and leveraging core competencies.

  Expected to pay annual dividends

Brickhouse is expected to pay annual dividends of $1.90 and $2.10 over the next two years, respectively. After that, the company expects to pay a constant dividend of $2.30 a share. What is the value of this stock at a required return of 16 percent?

  Differ only in their capital structure

Companies A and B differ only in their capital structure. A is financed 30% with riskless debt and 70% with equity; B is financed entirley with equity. Both companies operate in a perfect capital market and earn $200,000 of operating income each year..

  Calculate the expected sale price of the bond

You have just purchased a five- year maturity bond for $ 10,000 par value that pays $ 610 in coupon interest annually ($ 305 every six months). You expect to hold the bond until maturity. Calculate your expected total return if you can reinvest all c..

  Construct statements of cash flows

Construct Statements of Cash Flows for 20X2 and 20X3.Where is the company's money going to and coming from?Make a comment about their free cash flows during the period.Is it likely to have positive or negative free cash flows in the future?

  What is the total cash paid for this bond purchase

You purchase a Eurobond, at a quoted price of 102%. The annual coupon is 6%, and we are exactly one month after the past coupon date. You buy 100,000 EUR nominal value of the bond. What is the total cash paid for this bond purchase?

  Estimate of the stocks current market value

Burke Tires just paid a dividend of D0 = $0.25. Analysts expect the company's dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the..

  Explain the alternative risk management approaches

Explain the alternative risk management approaches and their advantages and disadvantages for a medium-sized gold producer such as Mesa. State which approach you think is appropriate for Mesa and why.

  Transaction deposits on its balance sheet

Patriotic Bank currently has $800 million in transaction deposits on its balance sheet. The current reserve requirement is 10 percent, but the Federal Reserve is decreasing this requirement to 8 percent. Present the balance sheet (before and after ch..

  Preferred stock which pays

We have a preferred stock which pays $ 8 per year. When we buy it, the cops is 8% .We keep it for 2 years and then sell it. At that time, cops drops to 4%. What is the price we sell it at? If the stock is called after 4 years at 120%, if the cops is ..

  The writer of a call option

The writer of a call option has

  Security market line sml reward-to-risk

Stock Y has a beta of .9 and an expected return of 11.2 percent. Stock Z has a beta of 0.5 and an expected return of 7.2 percent. If the risk-free rate is 5.0 percent and the market risk premium is 6.0 percent, the reward-to-risk ratios for stocks Y ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd