Homework answers / question archive / 1

1

Finance

Share With

1. How would the value of a firm be affected by the following events?
A. The introduction of a new product designed to increase the firm’s cash inflows is delayed by
one year. The size of the expected cash flows is not affected.
B. A firm announces to the press that its cash earnings for the coming year will be 10 percent
higher than previously forecast.

2.Rachna is considering a life insurance plan that will require her to pay a premium of $150 every year for the next 30 years. She wants to make sure that she is able to make this payment and wants to put away a lump sum today in her bank to cover all future payments. How much would she need to deposit in her bank if the annual interest rate on her deposit account is 5%? (Enter just the number in dollars without the $ sign or a comma and round off decimals to the closest integer, i.e., rounding $30.49 down to $30 and rounding $30.50 up to $31.)