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2025 T1 DP DPBS1180 BMGT1380 Value Creation

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Which of the following is true about the face value of a bond?

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Consider the following timeline detailing a stream of cash flows:

If the current market rate of interest is 8%, then the future value (FV) of this stream of cash flows is closest to:

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How much will each coupon payment be of a 20-year $500 bond with a 10% coupon rate and quarterly payments?

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Suppose that a young couple has just had their first baby and they wish to ensure that enough money will be available to pay for their child's university education. They decide to make deposits into an educational savings account on each of their daughter's birthdays, starting with her first birthday. Assume that the educational savings account will return a constant 7%. The parents deposit $2 000 on their daughter's first birthday and plan to increase the size of their deposits by 5% each year. Assuming that the parents have already made the deposit for their daughter's 18th birthday, then the amount available for the daughter's university expenses on her 18th birthday is closest to:

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Consider the following timeline:

 

If the current market rate of interest is 9%, then the present value (PV) of this timeline as of year 0 is closest to:

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Which of the following is true about perpetuities?

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Samantha enters a rent-to-own agreement for living room furniture. She will pay $60 per month for one year. Which of the following shows the timeline for her payments if the first payment is one month from now?

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If money is invested at 8% per year, after approximately how many years will the interest earned be equal to the original investment?

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An investment pays you $20 000 at the end of this year, and $10 000 at the end of each of the four following years. What is the present value (PV) of this investment, given that the interest rate is 4% per year?

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A perpetuity will pay $2 500 per year, starting five years after the perpetuity is purchased. What is the future value (FV) of this perpetuity, given that the interest rate is 5%?

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