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What is the present value of payments

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1. A 10-year annuity paying $x at the beginning of every year (i.e. the first of ten payments is made today) is worth the same (today) as an annuity of $300 payable every 6 months for 10 years (20 payments), the first payment of which is due 66 months from now. If the annual interest rate (compounded annually) is 3%, find x. a. $232.73 d. $508.11 b. $502.48 e. $521.42 c. $506.23

2. A machine costing $3,000 must be replaced at the end of 8 years. The resale value of the machine at the time of replacement is $600. At what annual discount rate (compounded annually) would it be equally economical to use a similar machine costing $4,000 with a life of 8 years and a resale value of $1,900? (Assume that there is no taxes.) a. 2.4% d. 3.3% b. 2.7% e. 3.6% c. 3.0%

3. What is the present value of 15 payments of $100 each received every 18 months (the first one occuring in 18 months from now), if the annual discount rate (compounded annually) is 9%? a. $620.43 d. $951.28 b. $875.56 e. $1,209.10 c. $930.61

4. Corporate managers can maximize shareholder wealth by choosing positive NPV projects because: a. all investors have the same preferences. b. the unhappy shareholders can sell off their shares. c. given the existence of financial markets, investors will be satisfied with the same real investment decisions regardless of personal preferences. d. managers are wiser than shareholders regarding investments. e. none of the above.

1. A 10-year annuity paying $x at the beginning of every year (i.e. the first of ten payments is made today) is worth the same (today) as an annuity of $300 payable every 6 months for 10 years (20 payments), the first payment of which is due 66 months from now. If the annual interest rate (compounded annually) is 3%, find x. a. $232.73 d. $508.11 b. $502.48 e. $521.42 c. $506.23

2. A machine costing $3,000 must be replaced at the end of 8 years. The resale value of the machine at the time of replacement is $600. At what annual discount rate (compounded annually) would it be equally economical to use a similar machine costing $4,000 with a life of 8 years and a resale value of $1,900? (Assume that there is no taxes.) a. 2.4% d. 3.3% b. 2.7% e. 3.6% c. 3.0%

3. What is the present value of 15 payments of $100 each received every 18 months (the first one occuring in 18 months from now), if the annual discount rate (compounded annually) is 9%? a. $620.43 d. $951.28 b. $875.56 e. $1,209.10 c. $930.61

4. Corporate managers can maximize shareholder wealth by choosing positive NPV projects because: a. all investors have the same preferences. b. the unhappy shareholders can sell off their shares. c. given the existence of financial markets, investors will be satisfied with the same real investment decisions regardless of personal preferences. d. managers are wiser than shareholders regarding investments. e. none of the above.

Reference no: EM132791089

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