What Is the Present Value of the Following Cash Flow $$\begin{array} { l c c c c c } \text { Years: } & 0 & 1 & 2 & 3 & 4 \\\hline \text { CFs: } & \$ 0 & \$ 75 & \$ 225 & \$ 0 & \$ 300\end{array}$$

question 9

Multiple Choice

What is the present value of the following cash flow stream at a rate of 12.00%? $$\begin{array} { l c c c c c } \text { Years: } & 0 & 1 & 2 & 3 & 4 \\\hline \text { CFs: } & \$ 0 & \$ 75 & \$ 225 & \$ 0 & \$ 300\end{array}$$
?

• A) $546.24
• B) $402.03
• C) $436.99
• D) $511.28
• E) $441.36

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Definitions:

ESOs

Employee Stock Options refer to the rights given to employees, included in their remuneration package, enabling them to buy shares of the company stock at a predetermined price.

Guarantee

A formal promise or assurance, typically in writing, that certain conditions will be fulfilled or that a product will meet a specified level of quality.

American Call Option

A type of options contract that gives the holder the right, but not the obligation, to buy a specific amount of a security at a specified price within a specified time period.

Underlying Asset

The specific security, commodity, or other financial instrument that a financial derivative, such as an option or futures contract, is based upon.