Fundamentals of Corporate Finance, 12e (Ross)
Chapter 6 Discounted Cash Flow Valuation
1) Which one of the following statements correctly defines a time value of money relationship?
A) Time and future values are inverly related, all el held constant.
B) Interest rates and time are positively related, all el held constant.
C) An increa in a positive discount rate increas the prent value.
D) An increa in time increas the future value given a zero rate of interest.
E) Time and prent value are inverly related, all el held constant. 代理ip怎么用
葡萄酒是红酒吗2) Project X has cash flows of $8,500, $8,000, $7,500, and $7,000 for Years 1 to 4, respectively. Project Y has cash flows of $7,000, $7,500, $8,000, and $8,500 for Years 1 to
4, respectively. Which one of the following statements is true concerning the two projects given a positive discount rate? (No calculations needed)
A) Both projects have the same future value at the end of Year 4.
B) Both projects have the same value at Time 0.
C) Both projects are ordinary annuities.
D) Project Y has a higher prent value than Project X.
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E) Project X has both a higher prent and a higher future value than Project Y.
口苦口臭治疗方法3) Project A has cash flows of $4,000, $3,000, $0, and $3,000 for Years 1 to 4, respectively. Project B has cash flows of $2,000, $3,000, $2,000, and $3,000 for Years 1 to 4, respectively. Which one of the following statements is correct assuming the discount rate is positive? (No calculations needed)
A) The cash flows for Project B are an annuity, but tho of Project A are not.
B) Both ts of cash flows have equal prent values as of Time 0.
C) The prent value at Time 0 of the final cash flow for Project A will be discounted using an exponent of three.
D) Both projects have equal values at any point in time since they both pay the same total amount.
E) Project B is worth less today than Project A.
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4) You are comparing two investment options that each pay 6 percent interest, compounded annually. Both options will provide you with $12,000 of income. Option A pays $2,000 the first year followed by two annual payments of $5,000 each. Option B pays three annual payments of $4,000 each. Which one of the following statements is correct given the two investment options? Assume a positive discount rate. (No calculations needed.)
A) Both options are of equal value since they both provide $12,000 of income.
B) Option A has the higher future value at the end of Year 3.
C) Option B has a higher prent value at Time 0.
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D) Option B is a perpetuity.
E) Option A is an annuity.
5) Which one of the following statements related to annuities and perpetuities is correct?
A) An ordinary annuity is worth more than an annuity due given equal annual cash flows for 10 years at 7 percent interest, compounded annually.
B) A perpetuity comprid of $100 monthly payments is worth more than an annuity of $100 monthly payments provided the discount rates are equal.
C) Most loans are a form of a perpetuity.
D) The prent value of a perpetuity cannot be computed but the future value can.
E) Perpetuities are finite but annuities are not.
6) Which one of the statements related to growing annuities and perpetuities is correct?
A) You can compute the prent value of a growing annuity but not a growing perpetuity.
B) In computing the prent value of a growing annuity, you discount the cash flows using the growth rate as the discount rate.
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C) The future value of an annuity will decrea if the growth rate is incread.
D) An increa in the rate of growth will decrea the prent value of an annuity.
E) The prent value of a growing perpetuity will decrea if the discount rate is incread.
7) You are comparing two annuities that offer regular payments of $2,500 for five years and pay .75 percent interest per month. You will purcha one of the today with a singl
e lump sum payment. Annuity A will pay you monthly, starting today, while annuity B will pay monthly, starting one month from today. Which one of the following statements is correct concerning the two annuities?
A) The annuities have equal prent values but unequal future values.
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B) The two annuities have both equal prent and equal future values.
C) Annuity B is an annuity due.
