Question
Answered

# 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

Answer & Explanation
Solved by verified expert
Helpful
<p>nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam</p> Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet

Unlock full access to Course Hero

Explore over 16 million step-by-step answers from our library

a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lore

Donec al

ris

inar tortor nec facilisis. Pelle

remur laore, dictum vitae

ec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis.

ctusus antrem ipsum

ctum vitae odi

inia pulvinar tortor nel

congue vel laorl

acinia

Student reviews
73% (15 ratings)