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Author Question: Which has a greater present value, a future value of 300,000 received in year 6, or an ... (Read 66 times)

luminitza

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on: Jul 11, 2018
Which has a greater present value, a future value of 300,000 received in year 6, or an end-of-the-year annuity (first cash flow exactly one year from today) of 75,000 that lasts for four years if the relevant interest rate is 0?
 
  A) The future value of 300,000 is preferred.
  B) The annuity has a greater present value.
  C) You are indifferent to these two sets of cash flows on a present value basis.
  D) You can't properly answer this question because the interest rate is 0.

Question 2

Despite the clear cons of book value plus equity method of firm evaluation, we often see it used as a starting point for valuation.
 
  Indicate whether the statement is true or false


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joechoochoy

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Reply #1 on: Jul 11, 2018
Answer to Question 1

C
Explanation: C) Because the interest rate is 0, the present values are equal.

Answer to Question 2

TRUE


luminitza

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Reply 2 on: Jul 11, 2018
Excellent

mcabuhat

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Reply 3 on: Yesterday
Gracias!

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