FIN 571 Week 4 Individual

Assignment WileyPlus Quiz

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FIN 571 Week 4 Individual Assignment WileyPlus Quiz

FIN 571 Wileyplus Week 4 Practice Quiz

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.)

$26,625

$23,474

$16,088

$38,850

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.)

$2,250

$2,404

$2,713

$2,545

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.)

$33,124

$36,022

$41,675

$39,208

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.)

$434,599

$361,998

$309,432

$412,372

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.)

$101,766

$124,868

$251,154

$186,250

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.)

$28,403

$21,000

$26,124

$24,670

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

$990

$945

$1,066

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?

$11.88

$11.50

$9.80

$10.76

PV of dividends: Givens, Inc., is a fast growing technology company that paid

a $1.25 dividend last week. The companys 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

$8.00 Purchase