Corporate Finance Questions and Correct Answers & Latest Updated
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Course
Corporate Finance
Institution
Corporate Finance
The present value of future cash flows are computed by multiplying future value with the:
o :## discounting factor
Which of the following is used as the denominator while calculating the present value for a
growing perpetuity that begins next period (PVP)?
o :## The difference between i (the d...
Corporate Finance Questions and Correct
Answers & Latest Updated
The present value of future cash flows are computed by multiplying future value with the:
o :## discounting factor
Which of the following is used as the denominator while calculating the present value for a
growing perpetuity that begins next period (PVP)?
o :## The difference between i (the discount or interest rate) and g (the constant rate of
growth of the cash flow)
William deposited $25,000 today that would earn an interest at the rate of 3% for a period
of 2 years. The amount of $25,000 represents the:
o :## present value.
In computing the present and future value of multiple cash flows:
o :## each cash flow is discounted or compounded at the same rate.
Anna will receive $15,000 from a bank deposit in 2 years which has an interest rate of 3.5%.
The amount of $15,000 represents the:
o :## future value.
The present value of multiple cash flows is:
o :## less than the sum of the cash flows.
Master01: DO NOT COPY AND PASTE!! August 25, 2024 Latest Update
,2|Page: 2024/2025 Grade A+
The future value of multiple cash flows is:
o :## greater than the sum of the cash flows.
If your investment pays the same amount at the end of each year for a period of six years,
the cash flow stream is called:
o :## an ordinary annuity.
If your investment pays the same amount at the beginning of each year for a period of 10
years, the cash flow stream is called:
o :## an annuity due.
Cash flows associated with annuities are considered to be:
o :## a constant cash flow stream.
Which of the following statements is true of amortization?
o :## With an amortized loan, a larger proportion of each month's payment goes toward
interest in the early periods.
A firm receives a cash flow from an investment that will increase by 10 percent annually for
an infinite number of years. This cash flow stream is called:
o :## a growing perpetuity.
Your investment in a small business venture will produce cash flows that increase by 15
percent every year for the next 25 years. This cash flow stream is called:
Master01: DO NOT COPY AND PASTE!! August 25, 2024 Latest Update
, 3|Page: 2024/2025 Grade A+
o :## a growing annuity.
The true cost of borrowing is the:
o :## effective annual rate.
Which of the following equations is correct?
o :## Annuity due value = Ordinary value × (1+i)
Stowell earns 20% interest compounded annually on his savings. He will deposit $1,500
today, $1,650 one year from today, and $1,820 two years from today. What will be the
account balance three years from today? (Round intermediate calculations to nearest four
decimals.)
o :## $7,152
You have won the lottery and will receive 20 annual payments of $10,000 starting today. If
you can invest these payments at 8.5%, what is the present value of your winnings? (Round
the final answer to the nearest dollar.)
o :## $102,677
You are purchasing a used car and will make 5 annual payments of $3,500 starting one year
from today. If your funds could be invested at 9%, what is the present value of the car?
(Round the final answer to the nearest dollar.
o :## $13,614
Master01: DO NOT COPY AND PASTE!! August 25, 2024 Latest Update
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