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Which of the following is true for calculating the future value of...

Which of the following is true for calculating the future value of multiple cash flows?

  • You can only find the FV of multiple cash flows if the payments occur with the same regularity.
  • To find the FV of multiple cash flows, add the PV of each cash flow together and use the total in the formula for FV.
  • It is simpler to find the FV of irregular cash flows than of annuities.
  • You must choose the same point in the future for each individual cash flow to determine the FV of multiple investments.


Determine the value of a stock with the following variables using the constant growth model:

  • Current annual dividend: $0.85 per share
  • Required return rate: 7%
  • Constant growth rate: 4%
  • A) $22.74
  • B) $29.47
  • C) $28.33
  • D) $30.32


Consider what you have learned about valuing bonds. 

  • A: Coupon rate = 3.5%, YTM = 4%
  • B: Coupon rate = 3.2%, YTM = 3.2%
  • C: Coupon rate = 2.8%, YTM = 3.5%
  • D: Coupon rate = 4%, YTM = 3.7%

Which of the bonds is selling at a premium?


  • a) D
  • b) B
  • c) A
  • d) C


Bill wants to buy a bond whose face value is substantially higher than its market price.


What kind of bond should he buy?

  • a) Zero-coupon
  • b) Asset-backed
  • c) Inflation-linked
  • d) Government



You would like to have $8,000 in an account after four years' time.


If the account earns 4% compounded interest yearly, how much would you have to deposit today?


  • a) $7,692
  • b) $7,249
  • c) $6,838
  • d) $6,897

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