Statements is true of a perpetuity

Assignment Help Financial Management
Reference no: EM131188206

Which of the following statements is true of a perpetuity

A) A perpetuity has a fixed maturity

B) The present value of each payment made by a perpetuity is less than the previous payment

C) The present value of a perpetuity that pays $100 every year when the annual rate of discount is 5% is $1,000

D) The present value of a perpetuity that pays $200 every year when the annual rate of discount is 7% is $1,750

Reference no: EM131188206

Questions Cloud

Spontaneous liabilities to sales ratio-expected net income : Johnson company is expected to increase sales from $6,000,000 to $8,000,000. Total assets will be $3,000,000 at the end of the year. Calculate the following Capital Intensity Ratio, Spontaneous liabilities to sales ratio, expected Net Income over one..
All-equity structure to a levered capital structure for firm : You are writing a comparison of an all-equity structure to a levered capital structure for a firm. It is accurate to state in this comparison that:
Benefit of mutual funds that mainly buy stocks and hold : A benefit of mutual funds that mainly buy stocks and hold them is that
Assume that unsystematic risk is zero : In the CAPM, a stock has a beta coefficient of 0.5. The average returns to all stocks in the market is 8%. If the interest rate on three-month T-bills is at around 3 percent, what is the expected return to this stock? Assume that unsystematic risk is..
Statements is true of a perpetuity : Which of the following statements is true of a perpetuity
Propose an effective strategy : Suppose Supercompany uses all equity for an acquisition. Later, how could it make financial transactions that move it back to its chosen capital structure without necessarily affecting assets at that later date? propose an effective strategy?
What is the dividend payout ratio : Last year, a firm earned $61,200 in net income on sales of $217,600. The company paid $8,500 in dividends. What is the dividend payout ratio? K Toys just paid its annual dividend of $1.50. The required return is 8 percent and the dividend growth rate..
Operations by reduce outstanding stocks : Financial leverage impacts the performance of a firm by: In general, the capital structures used by U.S. firms: Holly's is currently an all equity firm that has 10,000 shares of stock outstanding at a market price of $60 a share. The firm has decided..
Financial leverage impacts the performance of a firm : Ignoring which of the following will cause the NPV of a project to be underestimated? Which one of the following is an example of a real option for a restaurant? Which one of condition indicates a highest level of risk of return? Financial leverage i..

Reviews

Write a Review

Financial Management Questions & Answers

  Assume that the interest received at the end of the year

You placed $6,397 in a savings account today that earns an annual interest rate of 7 percent compounded annually. How much will you have in the account at the end of 26 years? Assume that the interest received at the end of the year is reinvested to ..

  Stock is expected to pay a dividend

A stock is expected to pay a dividend of $0.75 at the end of the year, and it should continue to grow at a constant rate of 5% a year. If its required return is 9%, what is the stock’s expected price at 4 years from today? You must show your work to ..

  Should dickson city introduce the policy of credit sales

Dickson City Company has annual sales of $5 million, while the cost of goods sold is $3.2 million. All sales are made on a cash basis. The owner of Dickson has come up with the plan of giving credit to the customers. Should Dickson City introduce the..

  Bonds outstanding that carry an annual coupon

Birds of a Feather has 10-year bonds outstanding that carry an annual coupon of 8 percent. The bonds mature in 7 years and are currently priced at 110 percent of face value. What is the firm's pretax cost of debt? 6.20 percent 6.60 percent 7.34 perce..

  Signed a sales contract with a new customer

Webster Industrial Products just signed a sales contract with a new customer. What is this contract worth as of the end of year 4 if the following payments will be received and the firm earns 5 percent on its savings? Year 1 84,000, year 2 113,000, y..

  Considering increasing production after unexpected demand

Honda is considering increasing production after unexpected strong demand for its new motorbike. To evaluate the proposal, the company needs to calculate its cost of capital. You've collected the following information: The company wants to maintain i..

  How much potential value would the firm lose

A firm is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. The CEO wants to use the IRR criterion, while the CFO favors the NPV method. You were hired to advise ..

  Why is method misleading to the stakeholders

Shifting Future Expenses to the Current Period as a Special Charge A company might choose to accelerate discretionary expenses, such as repairs and maintenance, into the current period if the current year’s revenue is relatively high in relation to e..

  Find the duration and the modified duration

An investment pays 1000 each year for the next three years. An investor has purchased it to yield the annual rate of 8%. Find the duration and the modified duration.

  Deposits money for retirement

Kevin is planning to retire in 15 years. He deposits money for his retirement at 8% compounded monthly. It is estimated that the future general inflation (f bar) rate will be 4% compounded annually. What deposit must he make each month until he retir..

  About the portfolio return

Portfolio Return At the beginning of the month, you owned $6,300 of Company G, $8,600 of Company S, and $2,200 of Company N. The monthly returns for Company G, Company S, and Company N were 7.85 percent, -1.56 percent, and -.17 percent. What is your ..

  Prepare a statement of cash flows for 2013

Prepare a statement of cash flows for 2013, using the indirect method.  Assume that current assets (excluding cash) and current liabilities have remained the same on December 31, 2013.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd