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Business
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Corporate Finance Online
Exam 4: Time Value of Money - Streams and Valuations
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Question 61
Multiple Choice
Indicate which of the following is true about annuities.
Question 62
Multiple Choice
You borrow $42,500 over a nine year term. Your bank charges an annual rate of 10%. If the loan is repayable in equal end-of-period, annual payments, then what is the loan payment?
Question 63
Multiple Choice
The present value of $100 received at the end of year 1, $200 received at the end of year 2, and $300 received at the end of year 3, assuming an opportunity cost of 13 percent is: (Round to the nearest whole dollar)
Question 64
Multiple Choice
Actively managed mutual funds charge higher management fees than passive funds. Assume that the net return to an active fund (after fees) is 9.5% (0.79% per month) and the net return to a passive fund is 10.5% (0.875% per month) . Consider an investor who invests $600 per month (end-of-month) over thirty years in the passive fund. What is the future value of her savings? Now consider an investor who invests on a monthly basis over thirty years in the active fund. If the active fund investor wants the same future value as the passive fund investor, then how much more must she invest per month?
Question 65
Multiple Choice
Three years from now you will begin receiving annual payments of $7,200. This will continue for 14 years. At a discount rate of 5.8%, what is the present value of this stream of cash flows?
Question 66
Multiple Choice
________ is an annuity with an infinite life making continual annual payments.
Question 67
Multiple Choice
The present value of a $25,000 perpetuity at a 14 percent discount rate is: (Round to the nearest whole dollar.)
Question 68
Multiple Choice
The time value concept/calculation used in amortizing a loan is:
Question 69
Multiple Choice
Tony plans to deposit $1,000 at the end of each of the next three years. If his funds earn 5% compounded annually, how much will he have at the end of three years?
Question 70
Multiple Choice
You expect to receive $800 at the end of each of the next twenty years. What is the present value of the stream of payments if the interest rate is 6%?
Question 71
Multiple Choice
The future value of an ordinary annuity of $1,000 each year for 10 years, deposited at 3 percent, is: (Round to the nearest whole dollar)
Question 72
Multiple Choice
Peter will receive $1,200 at the beginning of each of the next seven years. What is the future value of this annuity, assuming the interest rate is 9% compounded annually? (Round to the nearest whole dollar)