1) What is the present value of a $9,800 ordinary perpetuity is the applicable discount rate is 7%?
a) $140,000.00
b) $9,158.88
c) $10,486.00
d) $1,400
2) Calculate the present value of a delayed perpetuity of $890 that starts with the first cash flow at the end of year 7 if the applicable discount rate is 11%.
a) $8,090.91
b) $4,325.73
c) $3,897.05
d) $8,980.91
3) What is the present value of a $20,000 perpetuity due if the applicable discount rate is 6%?
a) $333,333.33
b) $353,333.33
c) $38,867.92
d) $20,000
4) What is the present value of a growing perpetuity that starts with $1,280 at the end of year one and grows by 4.6% per year in perpetuity if the applicable discount rate is 8%?
a) $37,647.06
b) $39,378.82
c) $16,000.00
d) $40,658.82
5) An investment opportunity promises to make an annual payment that starts at $2,400 exactly one year from today and grows at a constant rate of 4% per year in perpetuity. If the required rate of return on this growing perpetuity is 12%. How much would it be worth today?
a) $2,142.86
b) $2,400
c) $30,000
d) $20,000
6) What is the present value today of a 6-year, $2,800 ordinary annuity if the applicable interest rate is 7%?
a) $16,800
b) $2,616.82
c) $46,666.67
d) $13,346.31