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Corporate finance
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A charitable foundation has $600,000 in its endowment fund. The board estimates that it will need $1.7 million in 22 years to fully fund a scholarship program. Assuming no additional contributions are made, what annual interest rate must the fund earn to reach its target amount? The correct answer is closest to:
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A charitable foundation has $800,000 in its endowment fund. The board estimates that it will need $1.9 million in 25 years to fully fund a scholarship program. Assuming no additional contributions are made, what annual interest rate must the fund earn to reach its target amount? The correct answer is closest to:
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A renewable energy company offers you a lifetime contract to receive annual payments for licensing your patented technology. The first payment of $1,200 will be made one year from today, and each subsequent payment will increase by 5.2% per year indefinitely. If the discount rate is 8.4% per year, what is the value of this payment stream immediately before the first payment is received? The answer is closest to:
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An international NGO deposits $22,000 at the end of each year into a community development fund that earns an annual interest rate of 5%. The first deposit will be made one year from today, and the NGO plans to make these annual contributions for 8 years. How much will be in the fund immediately after the final deposit is made? The answer is closest to:
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Your company is considering an investment in a new project. The project will generate $11,000 at the end of this year, $20,200 at the end of the following year, and $31,000 at the end of the year after that (three years from today). The interest rate is 4% per year. The present value of the project’s expected cash flow stream is closest to:
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Corporate Finance primarily addresses all the following question, except:
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You are setting up a college savings plan for your six-year-old son. Your goal is to have $93,000 saved by the time he begins college, which you expect will be in 12 years. The savings account you intend to use offers a fixed annual interest rate of 2.80%. To meet your goal, how much money should you invest today so that the account balance will reach $93,000 when he starts college? The answer is closest to:
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Your daughter is currently six years old. You anticipate that she will be going to college in 12 years. You would like to accumulate $111,000 in a savings account to fund her education at that time. The account promises to pay a fixed interest rate of 3% per year. If you plan to make equal yearly deposits, with the first deposit one year from today, what is the annual payment required to reach your goal of $111,000 in 12 years? The answer is closest to:
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You are setting up a college savings plan for your six-year-old son. Your goal is to have $102,000 saved by the time he begins college, which you expect will be in 12 years. The savings account you intend to use offers a fixed annual interest rate of 2.90%. To meet your goal, how much money should you invest today so that the account balance will reach $102,000 when he starts college? The answer is closest to:
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Which of the following characteristics of a company is the main source of agency conflicts and agency costs?
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