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Author Question: You have been accepted into a prestigious private university in Southern California - ... (Read 60 times)

jjjetplane

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on: Jul 11, 2018
You have been accepted into a prestigious private university in Southern California - congratulations Since no one from this school has ever graduated in only four years, you anticipate that you will need to make 10 semi-annual tuition payments of
 
  25,000 each with the first cash flow six months from today. If you choose to discount these cash flows at an annual rate of 6, what is the present value cost of tuition to attend your university of choice?
  A) 186,814.54
  B) 184,002.18
  C) 250,000.00
  D) 213,255.07

Question 2

Which of the following statements regarding firms and value is NOT true?
 
  A) We can create value by taking on negative net present value projects.
  B) Shareholder control in and of itself has value.
  C) Value is ultimately what someone is willing to pay for a firm.
  D) It is important to know what is being valued; the assets or the equity in a firm.


shaikhs

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

D
Explanation: D) Via Calculator: N = 52, I =6/2, PMT = 25,000, Solve for PV = 213,255.07.

Answer to Question 2

A


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