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Unformatted text preview: 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?...
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