Reference no: EM132816367

Questions - TIME VALUE OF MONEY

Q1. Mark purchased a serial bond of CDE corporation. The following information pertains to this investment: Face value of the bond= P8,000,000; Date of investment= Jan. 1, 2018; Bond matures every Dec.31 for P2,000,000; Interest are paid every Dec.31; Date of maturity= Dec. 31, 2021; Coupon rate= 8%; Required rate of return=6%. Find the value of the investment in January 1, 2018.

a. P9,372,278

b. P8,272,279

c. P8,372,278

d. P8,000,000

e. None of the above

Q2. A stock has an expected growth rate in the long-run for 15 percent and this common stock just paid a dividend of P2.00. If the investors required a 19 percent rate of return, what is the price of the stock?

a. P71.86

b. P57.50

c. P64.00

d. P62.25

e. P44.92

Q3. You decided that after college you are going to put up your own business, that is 3 years from now, and you would like to save at least P7,000 per year, beginning immediately. You are going to make 3 deposits in a savings account that gives a 5.2 percent interest. After 3 years of saving, how much will you have from today?

a. P25,645

b. P22,098

c. P20,993

d. P23,261

e. P24,424

Q5. Bill plans to deposit P200 into a bank account at the end of every month. The bank account has a nominal interest rate of 8% and interest is compounded monthly. How much will Bill have in the account at the end of 2½ years?

a. P6,617.77

b. P 5,232.43

c. P6,594.88

d. P22,656.74

e. P502.50

Q6. Marlon Corp. bonds have a par value of P1,000 and a price of P865. The outstanding bonds has an annual 8 percent coupon rate. The bonds will mature in eleven years. The yield to maturity is close to? Use the interpolation method.

a. 8.00%

b. 11.13%

c. 9.25%

d. 10.09%

e. 9.89%

Q7. Assume that Richard Parker wants to deposit P1,500 now in a bank that pays interest rate of 6% compounded semiannually. What's the future value of this deposit after 5 years?

a. P2,223

b. P1,915

c. P2,016

d. P1,819

e. P2,117