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FINCOACH: PROBLEMS 1) What is the present value of an annuity of \$12 received at the end of each year for seven years? A ssume a discount rate of 11 percent. The first payment will be received one year from today (roun d to nearest \$1). A) \$25 B) \$118 C) \$40 D) \$57 2) Savells Corporation bonds make a \$60 interest payment every six months (until maturity), and pa y \$1,000 at maturity 20 years from now. What is the current price of this bond if the discount rate is 10 percent per year compounded semi-annually? A) \$608 B) \$850 C) \$1,172 D) \$1,133 3) PDQ Company's preferred stock pays a perpetual annual dividend of \$2 per share. If the appropr iate discount rate for this investment is 8 percent, what is the price of one share of this stock? A) \$16.00 B) \$0.16 C) \$25.00 D) \$0.25 E) cannot be determined without maturity date 4) You deposit \$1,000 one time into a savings account earning a 5 percent annual rate compounded semi-annually. How much will you have in your account at the end of ten years?... View Full Document

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