Question : 91.Great Lakes Christmas Tree Co. expects to pay an annual : 1325661

91.Great Lakes Christmas Tree Co. expects to pay an annual dividend of $2 per share in perpetuity on its preferred shares starting one year from now. The firm is committed solely to its steady North American Christmas tree business (as opposed to, say, diversifying into landscape shrubbery). This profile warrants a required return of 6%. What is the present value of this dividend stream for investors?

a.$12.00

b.$1.89

c.$33.33

d.$2.12

92.Having acquired great fortune based on your mastery of finance, you decide to set up a charity. You’d like to give the finance department of your alma mater $100,000 next year, and you want to make an annual contribution in perpetuity, with each year’s contribution growing by 4%. The university can generate an 8% return on invested capital. What is the value of a lump-sum donation needed today to accomplish this?

a.$3,561

b.$833,333

c.$1,250,000

d.$2,500,000

93.If you invest $2,500 in a bank account that pays 6% interest compounded quarterly, how much will you have in five years?

a.$2,546.96

b.$3,367.14

c.$8,017.84

d.$13,267.04

94.Your credit card carries a 9.9% annual percentage rate, compounded daily. What is the effective annual rate, or annual percentage yield?

a.0.03%

b.9.90%

c.10.41%

d.18.00%

95.Calculate the annual payment for a 20-year mortgage on a $3.5 million building at a 7.5% interest rate. Assume that the entire building is financed and that payments are made at the end of each year, starting at the end of the first year and ending at the end of the 20th year.

a.$175,000.00

b.$343,322.67

c.$186,293.52

d.$340,815.32

96.Calculate the monthly payment for a 20-year mortgage on a $3.5 million building at a 7.5% interest rate. Assume that the entire building is financed and that payments are made at the end of each month, starting at the end of the first month and ending at the end of the last month.

a.$28,020.63

b.$28,195.76

c.$36,458.33

d.$61,947.83

97.You decide that your family would be comfortable living on an annual income of $150,000, growing at 4% per year. You’d also like to continue generating this cash flow for your descendents, forever. With investment returns of 8%, how much wealth would you need today to provide this income starting with $150,000 one year from now?

a.$1,250,000

b.$1,875,000

c.$1,904,218

d.$3,750,000

98.Atlas Map Co. has purchased a new building for $45 million. If the value of the building increases at a rate of 5% per year, how much will the building be worth in 20 years?

a.$119,398,397

b.$113,712,759

c.$16,960,027

d.$16,131,867

99.A stainless steel products manufacturer with an 8.5% cost of capital receives a $3,000,000 order, payable at the end of three years. What is the annual payment amount made at the end of each year with the equivalent present value?

a.$660,864

b.$919,618

c.$949,473

d.$997,785

100.Hamilton Industries needs a bulldozer. The purchasing manager has her eye on a new model that will be available in three years at a price of $75,000. If Hamilton’s discount rate is 11%, how much money does she need now to pay for the bulldozer when it’s available?

a.$49,405

b.$50,250

c.$54,839

d.$60,872