Author Question: What is the present value of a series of 5,000 end-of-the-year cash flows to be received forever if ... (Read 48 times)

cartlidgeashley

  • Hero Member
  • *****
  • Posts: 572
What is the present value of a series of 5,000 end-of-the-year cash flows to be received forever if the required rate of return is 6.00 per year and the first cash flow is one year from today?
 
  A) 8,333.33
  B) 83,333.33
  C) 300.00
  D) This question cannot be answered because there is no time period provided.

Question 2

Green Company stock has a beta of 2 and a required return of 23, while Gold Company stock has
  a beta of 1.0 and a required return of 14. The standard deviation of returns for Green Company is
  10 more than the standard deviation for Gold Company.
 
  The expected return on the market
  portfolio according to the CAPM is
  A) 9. B) 14. C) 10. D) 12.



Expo

  • Sr. Member
  • ****
  • Posts: 351
Answer to Question 1

B
Explanation: B) PV = PMT/r = 4,000/.06 = 83,333.33

Answer to Question 2

B



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Always store hazardous household chemicals in their original containers out of reach of children. These include bleach, paint, strippers and products containing turpentine, garden chemicals, oven cleaners, fondue fuels, nail polish, and nail polish remover.

Did you know?

Chronic necrotizing aspergillosis has a slowly progressive process that, unlike invasive aspergillosis, does not spread to other organ systems or the blood vessels. It most often affects middle-aged and elderly individuals, spreading to surrounding tissue in the lungs. The disease often does not respond to conventionally successful treatments, and requires individualized therapies in order to keep it from becoming life-threatening.

Did you know?

Every 10 seconds, a person in the United States goes to the emergency room complaining of head pain. About 1.2 million visits are for acute migraine attacks.

Did you know?

It is believed that humans initially contracted crabs from gorillas about 3 million years ago from either sleeping in gorilla nests or eating the apes.

Did you know?

More than 2,500 barbiturates have been synthesized. At the height of their popularity, about 50 were marketed for human use.

For a complete list of videos, visit our video library