10. What is the present value at year zero for the following cash flow at a disc
ID: 2791154 • Letter: 1
Question
10. What is the present value at year zero for the following cash flow at a discount rate of 10%? At year zero (now), you will receive $12,000.
$9,016
$12,000
$9,917
$8,196
None of the above
26. Your friend promises you a perpetuity of $1 every year. The first payment occurs in year 2, which of the following is right about its present value at time zero if r = 5%?
$20.00
$19.05
$10.82
No enough information
None of the above
29. Your friend promises you an annuity of $1 every year for 8 years. The first payment occurs at year 2, which of the following is right about its present value at year zero if r = 5%?
$6.46
$6.16
$5.51
No enough information
None of the above
32. How much is the par value for a 5-year maturity bond that has a price of $1,000
now and an annual coupon rate of 9% if the interest rate is 9%?
$700
$1,050
$1,000
$1,100
None of the above
33. What is the annual coupon payment for a bond (par value of $1,000) with 7 years
until maturity, a price of $1,000, and a discount rate of 6%?
$80
$70
$60
$50
None of the above
34. What happens to the price of a three-year bond with an 8% coupon when interest rates change from 6% to 8%?
A price increase of $53.47
A price decrease of $51.54
A price decrease of $53.47
No change in price
None of the above
35. What is the rate of return for an investor who pays $1,000 for a three-year bond
with a 7% coupon rate and sells the bond one year later for $1,000?
5%
6%
7%
8%
none of the above
Need help to solve questions with the correct formula. Questons from Financial Mangement Class. Thank You
Explanation / Answer
10.
present value=12000/(1+10%)^0=12000
the above is the answer
26.
Present value=(1/5%)/(1+5%)=19.05
the above is the answer
29.
present value=(1*((1-(1+5%)^(-8))/5%))/(1+5%)^1
=6.16
the above is the answer
32.
par value=1000
as interest rate is equal to the coupon rate
the above is the answer
we do only first 4 questions based on Chegg rule.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.