FINANCE 215 - Sophia Principles of Finance Milestone 2, Questions and 100% Correct Answers

FINANCE 215 - Sophia Principles of Finance Milestone 2, Questions and Answers Sophia Principles of Finance Milestone 2 1 Determine the value of a stock with the following variables using the constant growth model: Current annual dividend: $2.75 per share Required return rate: 8.5% Constant growth rate: 6% $110.00 $116.60 $119.35 $114.70 CONCEPT Stock Valuation 2 You would like to have $8,000 in an account after four years' time. If the account earns 4% compounded interest yearly, how much would you have to deposit today? $7,249 $6,838 $7,692 $6,897 CONCEPT Present Value, Single Cash Flows 3 Janice purchased a $1,000 10-year Treasury note that promised to pay her 1.125% interest every 6 months for the life of the loan. Which of those numbers is the par value of the note? 1.125 1,000 6 10 CONCEPT Key Characteristics of Bonds 4 Which of the following is true for calculating the future value of multiple cash flows? It is simpler to find the FV of irregular cash flows than of annuities. You must choose the same point in the future for each individual cash flow to determine the FV of multiple investments. You can only find the FV of multiple cash flows if the payments occur with the same regularity. To find the FV of multiple cash flows, add the PV of each cash flow together and use the total in the formula for FV.