Present Value of a Single Amount MCQs
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MCQs 1-10
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1. Assume that the interest rate is greater than zero. Which of the following cash-inflow streams totaling $1, 500 would you prefer? The cash flows are listed in order for Year 1, Year 2, and Year 3 respectively?
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2. The higher the Future Value (FV) of the payment, the higher will be the?
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3. Present value of a single amount is simply termed as current value of?
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4. ________ means current value of a future amount of money evaluated at a given interest rate?
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5. What does net present value give?
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6. What is the present value of $8, 000 to be paid at the end of three years if interest rate is 11%?
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7. What is the present value of a stream of $2,500 semiannual payments received at the end of each period for the next 10 years? The APR is 6%?
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8. What is the present value of $1,000 to be paid at the end of 5 years if the correct risk adjusted interest rate is 8%?
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9. To increase a given future value, the discount rate should be adjusted ________?
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10. You are to receive cash flows of $10,000,000 in 4 years’ time and $11,000,000 in 8 years’ time. Your discount rate is 9% per year. What is the present value of the cash flows?
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References
Financial Management: Theory and Practice, Dr Eugene F Brigham & C Micheal Ehrhardt
Fundamentals of Financial Management: Concise Edition, Brigham Houston
The Economist Guide to Financial Management, John Tennet
Financial Management: Core Concepts, Raymond M Brooks
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