Student name:
1) Marko, Incorporated, is considering the purchase of ABC Company. Marko believes that
ABC Company can generate cash flows of $6,100, $11,100, and $17,300 over the next three
years, respectively. After that time, they feel the business will be worthless. Marko has
determined that a rate of return of 15 percent is applicable to this potential purchase. What is
Marko willing to pay today to buy ABC Company?
1)
A) $26,815.83
B) $34,500.00
C) $38,467.50
D) $25,072.57
E) $22,501.57
Question Details
Difficulty : 1 Basic
Topic : Present value - multiple cash flows
Learning Objective : 06-01 Determine the future and present value of investments with multiple cash f
Section : 6.1 Future and Present Values of Multiple Cash Flows
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
2) Myca Corporation has a project with the following cash flows. What is the value of the
cash flows today assuming an annual interest rate of 8.5 percent?
Year Cash Flow
1 $ 1,520
2 1,850
3 2,115
4 2,125
2)
, A) $5,476.99
B) $6,161.61
C) $7,610.00
D) $6,685.35
E) $6,885.80
Question Details
Difficulty : 1 Basic
Topic : Present value - multiple cash flows
Learning Objective : 06-01 Determine the future and present value of investments with multiple cash f
Section : 6.1 Future and Present Values of Multiple Cash Flows
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
3) You are in talks to settle a potential lawsuit. The defendant has offered to make annual
payments of $15,000, $25,000, $40,000, and $60,000 to you each year over the next four years,
respectively. All payments will be made at the end of the year. If the appropriate interest rate is
3.7 percent, what is the value of the settlement offer today?
3)
A) $140,000.00
B) $132,733.17
C) $125,466.34
D) $111,525.63
E) $130,108.59
Question Details
Difficulty : 1 Basic
Topic : Present value - multiple cash flows
Learning Objective : 06-01 Determine the future and present value of investments with multiple cash f
Section : 6.1 Future and Present Values of Multiple Cash Flows
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
,4) The value today of the following cash flows is $5,614.66 at an interest rate of 3.9 percent.
What is the value of the Year 3 cash flow?
Year Cash Flow
1 $ 1,380
2 1,465
3 ?
4 2,030
4)
A) $3,290.47
B) $739.66
C) $1,187.43
D) $1,259.64
E) $1,331.85
Question Details
Difficulty : 1 Basic
Topic : Present value - multiple cash flows
Learning Objective : 06-01 Determine the future and present value of investments with multiple cash f
Section : 6.1 Future and Present Values of Multiple Cash Flows
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
5) One year ago, the Jenkins Family Fun Center deposited $3,700 into an investment
account for the purpose of buying new equipment four years from today. Today, they are adding
another $5,500 to this account. They plan on making a final deposit of $7,700 to the account next
year. How much will be available when they are ready to buy the equipment, assuming they earn
a rate of return of 9 percent?
5)
, A) $23,428.33
B) $20,754.94
C) $22,363.92
D) $21,812.99
E) $22,533.03
Question Details
Difficulty : 1 Basic
Topic : Future value - multiple cash flows
Learning Objective : 06-01 Determine the future and present value of investments with multiple cash f
Section : 6.1 Future and Present Values of Multiple Cash Flows
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
6) Assuming an interest rate of 4.7 percent, what is the value of the following cash flows
four years from today?
Year Cash Flow
1 $ 3,400
2 4,360
3 6,285
4 8,455
6)
A) $24,590.79
B) $25,067.05
C) $24,114.54
D) $23,717.15
E) $22,768.46
1) Marko, Incorporated, is considering the purchase of ABC Company. Marko believes that
ABC Company can generate cash flows of $6,100, $11,100, and $17,300 over the next three
years, respectively. After that time, they feel the business will be worthless. Marko has
determined that a rate of return of 15 percent is applicable to this potential purchase. What is
Marko willing to pay today to buy ABC Company?
1)
A) $26,815.83
B) $34,500.00
C) $38,467.50
D) $25,072.57
E) $22,501.57
Question Details
Difficulty : 1 Basic
Topic : Present value - multiple cash flows
Learning Objective : 06-01 Determine the future and present value of investments with multiple cash f
Section : 6.1 Future and Present Values of Multiple Cash Flows
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
2) Myca Corporation has a project with the following cash flows. What is the value of the
cash flows today assuming an annual interest rate of 8.5 percent?
Year Cash Flow
1 $ 1,520
2 1,850
3 2,115
4 2,125
2)
, A) $5,476.99
B) $6,161.61
C) $7,610.00
D) $6,685.35
E) $6,885.80
Question Details
Difficulty : 1 Basic
Topic : Present value - multiple cash flows
Learning Objective : 06-01 Determine the future and present value of investments with multiple cash f
Section : 6.1 Future and Present Values of Multiple Cash Flows
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
3) You are in talks to settle a potential lawsuit. The defendant has offered to make annual
payments of $15,000, $25,000, $40,000, and $60,000 to you each year over the next four years,
respectively. All payments will be made at the end of the year. If the appropriate interest rate is
3.7 percent, what is the value of the settlement offer today?
3)
A) $140,000.00
B) $132,733.17
C) $125,466.34
D) $111,525.63
E) $130,108.59
Question Details
Difficulty : 1 Basic
Topic : Present value - multiple cash flows
Learning Objective : 06-01 Determine the future and present value of investments with multiple cash f
Section : 6.1 Future and Present Values of Multiple Cash Flows
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
,4) The value today of the following cash flows is $5,614.66 at an interest rate of 3.9 percent.
What is the value of the Year 3 cash flow?
Year Cash Flow
1 $ 1,380
2 1,465
3 ?
4 2,030
4)
A) $3,290.47
B) $739.66
C) $1,187.43
D) $1,259.64
E) $1,331.85
Question Details
Difficulty : 1 Basic
Topic : Present value - multiple cash flows
Learning Objective : 06-01 Determine the future and present value of investments with multiple cash f
Section : 6.1 Future and Present Values of Multiple Cash Flows
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
5) One year ago, the Jenkins Family Fun Center deposited $3,700 into an investment
account for the purpose of buying new equipment four years from today. Today, they are adding
another $5,500 to this account. They plan on making a final deposit of $7,700 to the account next
year. How much will be available when they are ready to buy the equipment, assuming they earn
a rate of return of 9 percent?
5)
, A) $23,428.33
B) $20,754.94
C) $22,363.92
D) $21,812.99
E) $22,533.03
Question Details
Difficulty : 1 Basic
Topic : Future value - multiple cash flows
Learning Objective : 06-01 Determine the future and present value of investments with multiple cash f
Section : 6.1 Future and Present Values of Multiple Cash Flows
AACSB : Analytical Thinking
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
6) Assuming an interest rate of 4.7 percent, what is the value of the following cash flows
four years from today?
Year Cash Flow
1 $ 3,400
2 4,360
3 6,285
4 8,455
6)
A) $24,590.79
B) $25,067.05
C) $24,114.54
D) $23,717.15
E) $22,768.46
