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# Introduction to Finance

This quiz test introductory finance topics.

1

If \$100 today is invested at 10 percent per year compounded, what will it be worth in two years?

2

An annuity is defined as:

3

Jim received \$50 at the end of the year for 5 years, at which point he no longer received any funds. He received an annual interest rate of 5 percent on his investment. How much did Jim invest to receive these funds?

4

The risk-free rate is 4 percent. The stock market is returning 13 percent. XYZ Corporation is 1.5 times as risky as the stock market. What rate of return are investors demanding on XYZ stock?

5

ABC stock just paid a dividend of \$2.50. Its dividend will grow by 10 percent indefinitely. Investors demand a return of 15 percent on the stock. What is the stock's current price?

6

True or False: If a stock's dividends are expected to grow at different amounts in stages, the Gordon Dividend Growth Model is the most accurate way to compute its current price.

7

True or False: The payback method does not account for the time value of money.

8

Jin Hun Company invests \$100,000 in a plant. Its cash flows are \$50,000 per year for the next 4 years. Its internal rate of return is:

9

Jin Hun Company invests \$100,000 in a plant. Its cash flows are \$50,000 per year for the next 4 years. Its discount rate is 30 percent. The net present value of the investment is:

10

John deposits \$10,000 into a bank account at the beginning of each year for 5 years. His account earns 7.5 percent interest per year. How much does John have after the final deposit?