1. Which one of the following is generally valued as a perpetuity?
A) preferred stock
B) long-term bond
C) non-dividend paying common stock
D) common stock paying increasing dividends
2. The future value of a series of cash flows over time can be computed by:
A) finding the future value of the first cash flow and multiplying that amount by the number of cash flows which occur.
B) summing the amount of each of the individual cash flows and multiplying the summation by (1+r)t.
C) summing the future values of each of the individual cash flows.
D) discounting each of the individual cash flows and summing the results.