Name: ID: A 36, Y You plan to anal yze the value of a potential investment by calculating the sum of the present values of its expected cash flows. Which of the following would increase the calculated value of the investment? a. The discount rate decreases b. The discount rate increases. c. The cash flows are in the form of a deferred annuity, and they total to $100,000. You learn that the annuity lasts for 10 years rather than 5 years, hence that each payment is for $10,000 rather than for $20,000. d. The total amount of cash flows remains the same, but more of the cash flows are received in the later years and less are received in the earlier years. 37. Which of the following statements is CORRECT? The primary reason the annual report is important in finance is that it is used by investors when they form expectations about the firm's future carnings and dividends, and the riskiness of those cash flows. a. b. The annual report is an internal document prepared by a firm's managers solely for the use of its creditors/lenders. The four most important financial statements provided in the annual report are the balance sheet, income statement, cash budget, and statement of stockholders' equity Prior to the Enron scandal in the early 2000s, companies would put verbal information in their annual reports, along with the financial statements. That verbal information was c. d. often misleading, so today annual reports can contain only quantitative information-audited financial statements. You want to go to Europe 5 years from now, and you can save $8,700 per year, beginning one year from today. You plan to deposit the funds in a mutual fund that you think will return 85% per year. Under conditions, how much would you have just after you make the 5th deposit, 5 years from now? 38. a. $41,756.10 b. $63,922.92 c. $56,190.31 d. $51,550.74 Which of the following would be most likely to lead to a higher level of interest rates in the economy a. 39. The Federal Reserve decides to try to stimulate the economy b. Corporations step up their expansion plans and thus increase their demand for capital. The level of inflation begins to decline. c. d. Households start saving a larger percentage of their income. Helmuth Inc's latest net income was $1,210,000, and it had 225,000 shares outstanding. The comp to pay out 45% of its income. What dividend per share should it declare? a. $2.49 b. $2.06 c. $2.42 d. $2.11 40