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Corporate finance
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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 $1,500 will be made one year from today, and each subsequent payment will increase by 5.5% per year indefinitely. If the discount rate is 8.7% 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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A renewable energy company offers you a lifetime contract to receive annual payments for licensing your patented technology. The first payment of $1,600 will be made one year from today, and each subsequent payment will increase by 5.6% per year indefinitely. If the discount rate is 8.8% 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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Suppose you invest $1,300 in an account paying 8% interest per year. How much of the balance in the account after 6 years corresponds to the interest? The answer is closest to:
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You have invested in a security that provides an annual income of $200 per year indefinitely. If the appropriate discount rate is 6%, what is the value of your investment immediately after a payment is received? The answer is closest to:
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Suppose you invest $1,000 in an account paying 8% interest per year. How much of the balance in the account after 3 years corresponds to the interest? The answer is closest to:
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An international NGO deposits $14,000 at the end of each year into a community development fund that earns an annual interest rate of 7%. The first deposit will be made one year from today, and the NGO plans to make these annual contributions for 10 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 $9,500 at the end of this year, $19,900 at the end of the following year, and $25,000 at the end of the year after that (three years from today). The interest rate is 5.5% per year. The present value of the project’s expected cash flow stream is closest to:
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According to the stewardship theory,
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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 $129,000 in a savings account to fund her education at that time. The account promises to pay a fixed interest rate of 3.20% 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 $129,000 in 12 years? The answer is closest to:
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You plan to deposit $740 at the end of each year into an education savings account that earns an annual interest rate of 7.12%. The first deposit will be made one year from today, and you intend to continue these deposits for 12 years. At the end of the twelfth year, you plan to use the accumulated amount to support your younger cousin’s education. What is the present value of your planned contributions? The answer is closest to:
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