Ordinary annuity cash flow

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1. What is the future value in year twelve of an ordinary annuity cash flow of $6,000 per year at an interest rate of 4.00% per year?

a. $90,154.83

b. $93,761.02

c. $28,675.97

d. 32,117.08

2. If the firm uses the after-tax cost of new debt as the discount rate when analyzing a refunding decision, and if the NPV of refunding is positive, then the value of the firm will be maximized if it immediately calls the outstanding debt and replaces it with an issue that has a lower coupon rate.

Reference no: EM132072672

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