Calculate the present value of a delayed perpetuity

Assignment Help Financial Management

Reference no: EM131014086

1) What is the present value of a $9,800 ordinary perpetuity is the applicable discount rate is 7%?

a) $140,000.00

b) $9,158.88

c) $10,486.00

d) $1,400

2) Calculate the present value of a delayed perpetuity of $890 that starts with the first cash flow at the end of year 7 if the applicable discount rate is 11%.

a) $8,090.91

b) $4,325.73

c) $3,897.05

d) $8,980.91

3) What is the present value of a $20,000 perpetuity due if the applicable discount rate is 6%?

a) $333,333.33

b) $353,333.33

c) $38,867.92

d) $20,000

4) What is the present value of a growing perpetuity that starts with $1,280 at the end of year one and grows by 4.6% per year in perpetuity if the applicable discount rate is 8%?

a) $37,647.06

b) $39,378.82

c) $16,000.00

d) $40,658.82

5) An investment opportunity promises to make an annual payment that starts at $2,400 exactly one year from today and grows at a constant rate of 4% per year in perpetuity. If the required rate of return on this growing perpetuity is 12%. How much would it be worth today?

a) $2,142.86

b) $2,400

c) $30,000

d) $20,000

6) What is the present value today of a 6-year, $2,800 ordinary annuity if the applicable interest rate is 7%?

a) $16,800

b) $2,616.82

c) $46,666.67

d) $13,346.31

Reference no: EM131014086

Questions Cloud

Calculate how a market trader : Assuming the following? quotes, calculate how a market trader at Citibank with $1,000,000 can make an intermarket arbitrage profit.

What is the value of this business at a discount rate : TH Manufacturers expects to generate cash flows of $129,600 for the next two years. At the end of the two years the business will be sold for an estimated $3.2 million. What is the value of this business at a discount rate of 14 percent?

What will be the price of the bond-coupon bond-face value : XYZ has a $1000 Face Value 5% Coupon Bond (paid semi-annually). The bond is selling for $937.19 today and matures in 8 years. What will be the price of the bond in 1 year (the bonds now have 7 years left until maturity) if the YTM investors demand in..

Rate is consistent with the market rates : Suppose you buy a 20-year bond with face value of $1000 which pays annual coupons with a coupon rate of R=5% . Let's say that that rate is consistent with the market rates, so you pay $1000 ('par'). After 5 years, right after the 5th coupon has been ..

Calculate the present value of a delayed perpetuity : What is the present value of a $9,800 ordinary perpetuity is the applicable discount rate is 7%? Calculate the present value of a delayed perpetuity of $890 that starts with the first cash flow at the end of year 7 if the applicable discount rate is ..

What is the present value of all three perpetuities together : You will receive a $100 annual perpetuity, the first payment to be received now, at Year 0, a $300 annual perpetuity payable starting at the end of Year 5, and a $200 semiannual (2 payments per year) perpetuity payable starting midway through year 10..

The hottaco contest : You are the winner of "The HotTaco Contest" , and are given the following choices as compensation. If the interest rate is 12%, which one of the following would you take. $100,000 now, $180,000 at the end of 5 years, $19,000 for each of the next 10 y..

Calculate the present value of revenues-maintenance costs : Erin is considering investing in a new plant that is expected to bring in $1,000,000 in revenues per annum provided that it is adequately maintained. Calculate the present value of revenues and the present value of maintenance costs. (Hint: you first..

Domestic corporation-manufactures and sells widgets : USAco, a domestic corporation, manufactures and sells widgets in the U.S. and worldwide through its two wholly-owned foreign subsidiaries. USAco’s Hong Kong subsidiary, HKco, earns $100,000 of foreign-source income from sales in Hong Kong and pays $2..

User Account

All Pages