What Is the Present Value of Four Payments of $5,000

question 50

Multiple Choice

What is the present value of four payments of $5,000 at the end of each of the next four years if the interest rate is 2 percent?

• A)$9,430.50
• B)$18,358.12
• C)$20,000.00
• D)$19,038.64

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Definitions:

Cash Flow to Stockholders

The amount of cash a company pays out to its shareholders, including dividends and net share buybacks.

Dividends Per Share

The amount of dividends paid out to shareholders per share of the company’s stock.

Financial Leverage

The use of borrowed funds in an attempt to increase the return on equity, involving higher risk but potentially higher returns as well.

Free Cash Flow

The cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.