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Author Question: Cash budgets are completed only on an annual basis because shorter periods of time are too variable ... (Read 36 times)

lidoalex

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on: Jul 10, 2018
Cash budgets are completed only on an annual basis because shorter periods of time are too
  variable and uncertain for meaningful results.
 
  Indicate whether the statement is true or false

Question 2

You dream of endowing a chair in finance at the local university that will provide a salary of 150,000 per year forever, with the first cash flow to be one year from today.
 
  If the university promises to invest the money at a rate of 5 per year, how much money must you give the university today to make your dream a reality?
  A) 3,000,000
  B) 15,000,000
  C) 2,857,143
  D) This question cannot be answered.
Foundations of Finance ¦ Keown, Petty, Martin ¦ 9th Edition
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karlss

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

FALSE

Answer to Question 2

Answer: A
Explanation: A) PV = PMT/r = 150,000/.05 = 3,000,000.


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