2-) Piscain Pay Inc. expects to pay a dividend of $410,000 at the end of the first year and projects a growth in dividends of 6.45 percent per year. If k is 14.75 percent and it expects to grow for another five years, what is the present value of the dividends?

1,791,509.76

1,791,529.76

1,791,549.76

1,791,569.76

None of the above

3-) ROFL Corporation expects to earn $379,000 at the end of the second year and projects a growth in earnings of 6.15 percent per year. If k is 7.95 percent, what is the present value of the earnings if the company will be liquidated after twenty years from now?

5,331,135.24

5,332,135.24

5,333,135.24

5,334,135.24

None of the above

4-) LOL Inc. expects to earn $627,000 at the end of first year and projects a growth rate in earnings of 4.5%/year thereafter (k=3.5%). What is the PV of the earnings if it expects to grow for another 8 years and to have then level earnings forever?

24,359,974.94

24,360,074.94

24,360,174.94

24,360,274.94

None of the above

5-) You own an oil pipeline that generates $780,000 cash flow over the next year. The pipelines operating costs are negligible and it is expected to last for a very long time. The interest rate is 4.45% but the volume of oil is expected to decline by 1.75% per year. What is the PV of the cash flow if it is assumed to last forever?

12,580,045.16

12,580,245.16

12,580,445.16

12,580,645.16

None of the above

6-) Mr. Philip Gonzalez deposits $8,123,233 today in an account earning 4.35% per year and will withdraw half of the accumulated amount every year for six years. How much is left after the seventh year?

70,000

171,000

172,000

173,000

None of the above

7-) Djenkarlos Kanela will receive $238,000 at end of year 2018. What is its present value at the beginning of 2013 (that is at the end of 2012) if the annual rate of interest is 2.85 percent?

201,031.81

201,051.81

201,071.81

201,091.81

None of the above

8-)

S=d11+k+d1(1+g)(1+k)2+d1(1+g)2(1+k)3+...+d1(1+g)n+1(1+k)n+2

None of the above