Question

In: Finance

Ally wishes to leave a provision in her will that $2 000 will be paid annually...

Ally wishes to leave a provision in her will that $2 000 will be paid annually in perpetuity to a local charity. How much must she provide in her will for this perpetuity if the interest rate is 5% per annum?

Select one:

a. $40,000

b. $50,000

c. $66,666.67

d. $33,333.33

Clear my choice

Question 8

FIN222 Ltd has 1,200,000 shares outstanding. It expects earnings at the end of the year of $4,500,000. FIN222 Ltd pays out 60% of its earnings in total – 40% paid out as dividends and 20% used to repurchase shares. If FIN222 Ltd’s earnings are expected to grow by 7% per year forever, the payout rate to remain unchanged and cost of equity is 9%, what is FIN222 Ltd’s share price?

Select one:

a. $80.25

b. $112.5

c. $75

d. $120.38

Clear my choice

Question 9

Which one of the following is FALSE?

Select one:

a. A bond is said to mature on the date when the issuer repays its notional value.

b. When a company issues a bond, the buyer of that bond cannot be a part owner of the issuing company.

c. The issuer of bonds regularly pay interest on the face value of the bond to the buyers of those bonds.

d. The coupon value of a bond is the face value of that bond.

Solutions

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

jeff jeffy answered 1 year ago
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