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Real Vs. Financial Assets

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1. Which of the following are real assets, and which are financial?
Assets
a. A share of stock.
b. A personal IOU.
c. A trademark.
d. A factory.
e. Undeveloped land.
f. The balance in the firm's checking account.
g. An experienced and hardworking sales force.
h. A corporate bond.

2. At an interest rate of 12%, the six-year discount factor is 0.507. How many dollars is $0.507 worth in six years if invested at 12%? (Do not round intermediate calculations. Round your answer to the nearest dollar amount.)

Amount $

3. If the PV of $139 is $125, what is the discount factor? (Round your answer to 3 decimal places.)

Discount factor

4. An investment costs $1,548 and pays $138 in perpetuity. If the interest rate is 9%, what is the NPV? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)

Net present value $

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Solution Summary

Word attachment identifies which options are real and financial assets, along with calculations for finding the value of an investment, a discount factor and net present value in 4 given questions.

Solution provided by:
Radhika Lakshmi, MPhil
Education
  • MPhil, Madurai Kamaraj University
  • MCom, Annamalai University
  • IATA, International Air Transport Association
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