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FIN 571 Week 4 Quiz

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Question;FIN 571 Week 4 Quiz;1. 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.);2. 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.);3. 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.);4. 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.);5. 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.);6. 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.);7. 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.);8. 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?;9. 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?

 

Paper#47596 | Written in 18-Jul-2015

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