1)Which of the following is the valuation equation for common stock assumes constantly growing dividends?

• Po = D1/ g
• Po = Do/ Ke
• Po = D1/ Ke
• Po = D1/ (Ke- g)

2)An annuity may be defined as:

• a series of consecutive payments or receipts of equal amounts.
• a series of payments of unequal amount.
• a series of yearly payments.
• a payment at a fixed interest rate.

3)The discount rate used to evaluate the financial decisions of the firm is called the:

• bank rate.
• cost of capital.
• prime rate.
• overnight rate.

4)Mr. Blochirt is creating a university investment fund for his daughter. He will put in $850 per year at the end of each year for the next 15 years and expects to earn an 8% annual rate of return. How much money will his daughter have when she starts university?

• $23,079
• $12,263
• $24,003
• $11,250