Author Question: The size of a corporation, as measured by stockholders' equity, depends primarily upon A) current ... (Read 133 times)

torybrooks · **on:** Jun 29, 2018

The size of a corporation, as measured by stockholders' equity, depends primarily upon

A) current net revenue.
B) people's expectations of future earnings.
C) the amount of capital invested in the corporation.
D) total sales (in dollar terms).

Question 2

An investment of 10,000 promises a payment of 13,000 after six years. If the annual rate of interest is 8, what is the net present value of the investment?

What will be an ideal response?

ebe · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

B

Answer to Question 2

Present value of the payment to be received after six years = 13,000/(1.08 )6 = 8,192.21.
Net present value of the investment = 8,192.21- 10,000 = -1,807.80.