1. To use the present value formula PV0 = C/r at time zero, which of the following is correct?

1. There are a finite number of cash flows in the future
2. There are at least one billion pieces of cash flows
3. The number of cash flows can be counted
4. There is no stopping of cash flows in the future
5. None of the above

2. To use the present value formula PV0 = C/r at time zero, which of the following is correct?

1. The first piece of cash flow will occur in period 1.
2. There are at least one trillion pieces of cash flows
3. The number of cash flows can be counted
4. There is a stopping point of cash flows in the future
5. None of the above

3. To use the present value formula PV0 = C/r at time zero, which of the following is correct?

1. There are a finite number of cash flows in the future
2. The cash flows can differ in different time periods
3. The number of cash flows can be counted
4. There may be a stopping point of cash flows
5. None of the above

4. Your friend promises you a perpetuity of $1 every year. The first payment occurs now, which of the following is right about its present value at time zero if r = 10%?

1. $10
2. $9.1
3. $0.91
4. No enough information
5. None of the above

5. Your friend promises you a perpetuity of $1 every year. The first payment occurs next year, which of the following is right about its present value at time zero if r = 10%?

a. $10

b. $9.1

c. $0.91

d.No enough information

e. None of the above

6. Your friend promises you a perpetuity of $1 every year. The first payment occurs in year 2, which of the following is right about its present value at time zero if r = 10%?

a. $10

b.$9.1

c. $0.91

d. No enough information

e. None of the above

7. Your friend promises you a perpetuity of $1 every year. The first payment occurs next year, which of the following is right about its present value at year 1 if r = 10%?

a. $10

b.$9.1

c. $0.91

d. No enough information

e. None of the above

8. To use the present value formula PV0 = C/r –C/((1+r)**T*r)) at time zero, which of the following is correct?

a. There are a finite number of cash flows in the future

b. There are at least one billion pieces of cash flows

c. The number of cash flows cannot be counted

d. There is no stopping of cash flows in the future

e. None of the above

9. To use the present value formula PV0 = C/r –C/((1+r)**T*r)) at time zero, which of the following is correct?

a. There are an infinite number of cash flows in the future

b. There are at least one billion pieces of cash flows

c. The number of cash flows cannot be counted

d. The first piece of cash flows starts in the next period

e. None of the above

10. To use the present value formula PV0 = C/r –C/((1+r)**T*r)) at time zero, which of the following is correct?

a. The cash flows cannot be different in different time periods

b. There are at least one billion pieces of cash flows

c. The number of cash flows cannot be counted

d. There is no stopping of cash flows in the future

e. None of the above

11. Your friend promises you an annuity of $1 every year for 10 years. The first payment occurs now, which of the following is right about its present value at time zero if r = 10%?

a. $6.14

b. $6.76

c. $5.59

d. No enough information

e. None of the above

12. Your friend promises you an annuity of $1 every year for 10 years. The first payment occurs next year, which of the following is right about its present value at time zero if r = 10%?

a. $6.14

b. $6.76

c. $5.59

d. No enough information

e. None of the above

13. Your friend promises you an annuity of $1 every year for 10 years. The first payment occurs at year 2, which of the following is right about its present value at time zero if r = 10%?

a. $6.14

b. $6.76

c. $5.59

d. No enough information

e. None of the above

14. Your friend promises you an annuity of $1 every year for 10 years. The first payment occurs at year 2, which of the following is right about its present value at year one if r = 10%?

a. $6.14

b. $6.76

c. $5.59

d. No enough information

e. None of the above

15. Which of the following is right about the mortgage type payment?

a. The total payments at different time periods are different

b. The total payment in each period consists of interest payment and principal payment

c. The total payment in each period is calculated by dividing the total borrowed money by the number of years of borrowing

d. The total payment in each period is the difference between the principal payment and interest payment

e. None of the above