Suppose That You Are Considering an Investment That Will Pay

question 65

Multiple Choice

Suppose that you are considering an investment that will pay you $4000 per year for the next five years.The appropriate rate of interest is 5%.You want to know the present value of the cash flows from this investment.To solve this problem in Microsoft Excel,you would use which of the following excel formulas?

• A)=PV(.05,5,4000,0,0)
• B)=PV(.05,5,4000,0,1)
• C)=PV(5,.05,4000,0)
• D)=PV(5,5,4000,0)

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Definitions:

Voting Shares

Shares of a company's stock that grant the holder the right to vote on corporate matters.

Significant Influence

Refers to the power to participate in the financial and operating policy decisions of an investee but is not control or joint control over those policies.

Dividends Received

Income received from owning shares in a company, typically paid out from the company's profits.

FVTPL

Fair Value Through Profit or Loss - a financial reporting method where assets and liabilities are measured at their current market value, with changes impacting the profit or loss directly.