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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 semiannually?
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
semiannually. How much will you have in your account at the end of ten years?
A)
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 Spring '08
 CPirinski
 Finance, Annuity

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