Finance 313 Chapter 6 Practice Quiz

Finance 313 Chapter 6 Practice Quiz - Chapter 6 Discounted...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 6 Discounted Cash Flow Valuation Chapter 06 Quiz Remember: For nonannual compounding, make these changes: multiply the “N”, divide the “I”, and divide the “PMT” (If it’s an annuity) ________ 1. You are able to pay mortgage payments of $675 a month for thirty years. The interest rate is 9.5 percent, compounded monthly. What price house can you afford to buy if you have $5,000 cash available as a down payment? a. $72,712.50 b. $75,275.51 c. $80,275.51 d. $85,275.51 ________ 2. You are going to receive $6,000 at the end of each quarter for the next five years. What is the net present value of these payments at a discount rate of 7 percent, compounded quarterly? a. $63,564.09 b. $100,517.29 c. $102,276.34 d. $103,011.96 ________ 3. You want to retire on the day you have $1,000,000 in your savings account. You expect to earn 4 percent, compounded monthly, on your money during your retirement. Your plan is to withdraw $4,500 a month as retirement income from this account. How many years can you be retired until you run out of money? a. 33.80 b. 69.56 c. 202.34 d. 405.65 ________ 4. A preferred stock pays annual dividends of $1.75. How much are you willing to pay today to buy one share of this stock if you want to earn a 12.5 percent rate of return? a. $6.00 b. $14.00 c. $24.00 d. $72.00 ________ 5. A project will produce cash flows of $6,000, $7,500, $9,000, and $11,000 a year for the next four years, respectively. What is the value of these cash flows today at a discount rate of 8.5 percent?
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/20/2011 for the course FIN 313 taught by Professor Richey,gregm during the Spring '11 term at CSU San Bernardino.

Page1 / 6

Finance 313 Chapter 6 Practice Quiz - Chapter 6 Discounted...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online