1. What's the present value of a $4,500 lump sum that you expect to receive at the end of 5 years if the discount rate is 4.5% per annum, compounded semiannually?

A. $3,602.30

B. $4,178.66

C. $3,270.59

D. $4,358.78

E. $3,566.27

2. In capital budgeting the cash flows that will occur if and only if a company decides to accept and invest in a project are called ________ cash flows.

A. constant

B. incremental

C. mutually exclusive

D. sunk

E. depreciation

3. A company has perpetual preferred stock outstanding with an annual dividend of $4.00 per share. The amount of the dividend will remain constant in the future. If the required return is 6.5% per annum, then at what price should the preferred stock sell?

A. $62.79

B. $48.00

C. $52.92

D. $61.54

E. $63.38