C-Rachel

[em01]

yuki0618

q

mayanfang1

答案和详解如下：

Q1. An investment offers $100 per year forever. If Peter Wallace’s required rate of return on this investment is 10%, how much is this investment worth to him?

A)   $1,000.

B)   $10,000.

C)   $500.

Correct answer is A)

For a perpetuity, PV = PMT ÷ I = 100 ÷ 0.10 = 1,000.

Q2. Compute the present value of a perpetuity with $100 payments beginning four years from now. Assume the appropriate annual interest rate is 10%.

A)   $683.

B)   $751.

C)   $1000.

Correct answer is B)

Compute the present value of the perpetuity at (t = 3). Recall, the present value of a perpetuity or annuity is valued one period before the first payment. So, the present value at t = 3 is 100 / 0.10 = 1,000. Now it is necessary to discount this lump sum to t = 0. Therefore, present value at t = 0 is 1,000 / (1.10)³ = 751.

Q3. Nortel Industries has a preferred stock outstanding that pays (fixed) annual dividends of $3.75 a share. If an investor wants to earn a rate of return of 8.5%, how much should he be willing to pay for a share of Nortel preferred stock?

A)    $31.88.

B)    $44.12.

C)    $42.10.

Correct answer is B)

PV = 3.75 ÷ 0.085 = $44.12.

Q4. Given investors require an annual return of 12.5%, a perpetual bond (i.e., a bond with no maturity/due date) that pays $87.50 a year in interest should be valued at:

A)   $70.

B)   $1,093.

C)   $700.

Correct answer is C)         

87.50 ÷ 0.125 = $700.