FIN 571 Week 4 WileyPLUS Practice Quiz NEW

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FIN 571 Week 4 WileyPLUS Practice Quiz NEW

Multiple Choice Question 66

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.)

$38,850

$23,474

$16,088

$26,625

Multiple Choice Question 61

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

$2,545
$2,713

$2,404

Multiple Choice Question 63

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

Multiple Choice Question 65

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.)

$361,998

$309,432

$434,599

$412,372

Multiple Choice Question 66

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.)

$186,250

$101,766

$124,868

$251,154
Multiple Choice Question 71

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

$24,670

$26,124

$21,000

Multiple Choice Question 61

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.)

$990

$872

$1,066

$945

Multiple Choice Question 56

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?

$10.76

$11.50

$9.80

$11.88

Multiple Choice Question 59

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?

$6.46

$7.24

$8.37

$1.25