Mid-Term BUSM230: Introduction to Business Finance

What is the formula for Present Value (PV)?

How do you calculate Future Value (FV)?

Which of the following is a type of annuity?

• Perpetuity

• Ordinary Annuity

• Growing Perpetuity

• Simple Interest

What is a growing perpetuity?

• A series of cash flows that grow at a constant rate indefinitely

• A series of cash flows that remain constant indefinitely

• A single cash flow that grows at a constant rate

• A series of cash flows that decrease over time

What is the formula for Net Present Value (NPV)?

What does the Payback Period measure?

• The time it takes for an investment to generate an amount of money equal to the initial investment

• The total profit from an investment

• The interest rate of an investment

• The future value of an investment

Which formula represents a perpetuity?

What is the main difference between an ordinary annuity and an annuity due?

• Timing of the cash flows

• Amount of the cash flows

• Interest rate applied

• Number of cash flows

How is the Present Value of a growing perpetuity calculated?

Which of the following is NOT a factor in calculating Net Present Value (NPV)?

• Initial investment cost

• Discount rate

• Future cash flows

• Inflation rate