Present value increases as interest rate increases

Assignment Help Financial Management

Reference no: EM131930196

Which of the following statements are ture?

I. Present value increases as interest rate increases

II. The value of a bond decreases when interest rates fall

III. The present value of 100 dollars in two years at 6% is $80

IV. Coupon payments do not affect the value of the bond Of the above:

a. All are true

b. All are false

c. I alone is false

d. I,II and III alone are false

e. I and IV alone are false

2. Determine the annual percentage interest cost for each of the following terms of sales, assuming the firm does not take the cash discount but pays on the final day of the net period (assume a 365-day year)

a. 1/20, net 30 ($500 invoice)

b. 2/30, net 60 ($1,000 invoice)

c. 2/5, net 10 ($100 invoice)

d. 3/10, net 30 ($250 invoice)

Reference no: EM131930196

Questions Cloud

What is the beta of your portfolio : How much money will you invest in Stock Y? What is the beta of your portfolio?

What is the project optimal life : Would the NPV change if the company planned to terminate the project at the end of Year 2? At the end of Year 1? What is the project’s optimal (economic) life?

Calculate the payback period-the NPV and the IRR : Gorilla Golf has decided to sell a new line of golf club. Calculate the payback period, the NPV and the IRR.

Calculate the levered beta-the cost of equity and the WACC : For each capital structure under consideration, calculate the levered beta, the cost of equity, and the WACC.

Present value increases as interest rate increases : Present value increases as interest rate increases. The value of a bond decreases when interest rates fall

What is the ebitda in the first year after the buyout : You are considering buying a company using leveraged buyout. What is the EBITDA in the first year after the buyout?

Discuss the concept of the risk-return trade-off : Discuss the concept of the risk-return trade-off and how it may apply in different circumstances.

What would the pretax profits be : What would the pretax profits be, per year, if the optimistic situation should occur? Show your computations.

Lending by promising to pay higher interest rates : Explain why these households can’t simply gain access to lending by promising to pay higher interest rates.

User Account

All Pages