Investment X and Investment Y Are Both Growing Perpetuities with Initial

question 60

Multiple Choice

Investment X and Investment Y are both growing perpetuities with initial cash flow of $100.Both investments have the same interest rate (r) .The present value of Investment X is $5,000,while the present value of Investment Y is $4,000.Which of the following is true?

• A)Investment X has a higher growth rate than Investment Y.
• B)Investment X has a lower growth rate than Investment Y.
• C)The answer cannot be determined without knowing the interest rate for both investments.
• D)This makes no sense - with the same initial cash flow and the same interest rate Investment X and Investment Y should have the same present value.

Identify the key roles and responsibilities within a firm's financial management structure.

Recognize the components and importance of a financial plan.

Define financial risk and identify its sources.

Distinguish between the different types of financial plans and their purposes.

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Definitions:

Treasurer

An official responsible for overseeing the management of a company's or organization's finances.

Chief Financial Officer

An executive at a high level tasked with overseeing a corporation's financial activities, which encompasses financial strategizing, managing risks, and maintaining financial records.

Firms

Business organizations or entities engaged in commercial, industrial, or professional activities.

Financial Managers

Professionals responsible for the financial health of an organization, including planning, directing investment activities, and managing financial reports.