Consider the following information as it relates to a perpetuity-style security: • Relevant rate of return observed in market = 6% per annum compounding half-yearly • A regular cash flow of $50 per half year will be paid in perpetuity, with the first cash flow occurring today Which of the following is closest to the PV of the cash flow stream expected of this perpetuity? a) $1,525.24 b) $1,618.12 c) $1,666.67 d) $1,716.67

Consider the following information obtained today: • Relevant rate of return observed in the market = 6% per annum compounding monthly • Expected cash flow in 1 years’ time: $1000 Which of the following is closest to the PV of the cash flow given the information above? a) $941.91 b) $942.18 c) $943.40 d) $970.52

Develop fundamental concepts of Annuity6. Calculate Future and Present value of Annuity7. Calculate Present Value of Perpetuities8. Valuing mixed cash flow stream

Which of the following statements regarding perpetuities is FALSE?a.PV of a perpetuity = r/Cb.None of them.c.To find the value of a perpetuity one cash flow at a time would take forever.d.A perpetuity is a stream of equal cash flows that occurs at regular intervals and lasts forever.e.One example of a perpetuity is the British government bond called a consol.

Multiple Choice QuestionWhich of the following is the approximate internal rate of return for an investment that costs $45,880 and has net cash flows of $4,000 for 20 years?Present Value of 1RatePeriods5%6%8%10%200.37690.31180.21450.1486Present Value of an Annuity of 1RatePeriods5%6%8%10%2012.462211.46999.81818.5136Multiple choice question.6%8%5%10%

Discounted cash flows applicationsNet present Value calculations have a broad range of applications in finance.Calculate the NPV of the project based on the information below.Initial investment: $20,00Cash flow generated each year: $5,000Total period: 5 YearsDiscount rate: 6%