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Author Question: Assume that you will receive 2,000 a year in Years 1 through 5, 3,000 a year in Years 6 through 8, ... (Read 116 times)

tiara099

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on: Jul 10, 2018
Assume that you will receive 2,000 a year in Years 1 through 5, 3,000 a year in Years 6 through 8, and 4,000 in Year 9, with all cash flows to be received at the end of the year.
 
  If you require a 14 percent rate of return, what is the present value of these cash flows? (Round to the nearest whole dollar)
  A) 9,851
  B) 13,250
  C) 11,714
  D) 15,129
  E) 17,353

Question 2

Due to unfavorable economic conditions, EFB Company's earnings and dividends are expected to remain unchanged for the next 3 years. After 3 years, dividends are expected to grow at a 10 annual rate forever.
 
  The last dividend was 2, and the required rate of return is 20. What should be the current market value of EFB stock?
  A) 13.46
  B) 14.51
  C) 15.22
  D) 16.03
  E) 16.95


phuda

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Reply #1 on: Jul 10, 2018
Answer to Question 1

C

Answer to Question 2

E


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tiara099

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Reply #2 on: Jul 10, 2018
Correct answers!


phuda

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Reply #3 on: Jul 10, 2018
Great! Please up vote :D


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