Question 1

You would like to establish a trust fund that would provide annual scholarships of $100,000 forever.How much would you have to deposit today in one lump sum to achieve this goal if you can earn a guaranteed 4.5 percent rate of return?

Accepted Answer

A)  $1,678,342
B)  $1,800,000
C)  $2,413,435
D)  $1,620,975
E)  $2,222,222F) All of the above
G) B) and C)

Question 2

Jorge is considering an investment that will pay $4,650 a year for five years, starting one year from today.What is the maximum amount he should pay for this investment if he desires a rate of return of 9.0 percent?

Accepted Answer

A)  $17,736.81
B)  $18,566.10
C)  $15,064.70
D)  $18,086.88
E)  $20,859.52F) None of the above
G) B) and E)

Exam 5: Discounted Cash Flow Valuation

Jorge is considering an investment that will pay $4,650 a year for five years, starting one year from today.What is the maximum amount he should pay for this investment if he desires a rate of return of 9.0 percent?

Correct Answer
verified

You would like to establish a trust fund that would provide annual scholarships of $100,000 forever.How much would you have to deposit today in one lump sum to achieve this goal if you can earn a guaranteed 4.5 percent rate of return?

Correct Answer
verified

Exam 5: Discounted Cash Flow Valuation

Jorge is considering an investment that will pay $4,650 a year for five years, starting one year from today.What is the maximum amount he should pay for this investment if he desires a rate of return of 9.0 percent?

Correct AnswerverifiedShow Answer

You would like to establish a trust fund that would provide annual scholarships of $100,000 forever.How much would you have to deposit today in one lump sum to achieve this goal if you can earn a guaranteed 4.5 percent rate of return?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified