Question 5 You are evaluating three investment schemes: X, Y and Z respectively. If the interest rate is 12% a year, which one of the following cash-inflow streams would give you highest present value at Yearo? Year 0 Choice Year Yearl T2 T3 T4 2 $500 $500 $500 Y 2 $500 $600 $400 Z ? $600 $500 $400 a) Z b) X c) Y d) All the streams of cash-inflows will you give equal present value since each investment offers a total of 1500 cash-inflow Question 6 You bought a share 6 month before for $10.00. The share is currently selling at $11.00. which one the following statement is true about this share? A) The holding period return of 10% and annualized return of 21% B) The holding period return of 10% and annualized return of 20.00% C) The holding period return of 11% and annualized return of 15% D) Cannot be determined from the given information. Question 7 Stock XYZ recently paid a dividend of $1.00 per share. It is expected to grow at the rate of 7% per year indefinitely. If the required rate of return is 11%, the value of the stock is: a) $26.75 b) 28.622 c) $25.21 d) none of the above answers is correct Question 8 The following statements about time value of money are correct EXCEPT for a) The higher the interest rate the higher the future value is b) The higher the interest rate the lower the present value is c) The greater the number of compounding period the lower the future value d) There is a negative relationship between interest rate and the present value