9 If the interest rate is 4%, the present value of $1000 received at the end of

Question

9
If the interest rate is 4%, the present value of $1000 received at the end of 3 years is A) $970. B) $1,040. C) $889. D) $961. 10
A good example of producer-producer rivalry is A) the process of buyer bidding for a second-hand, antique clock in an auction. B) negotiations between buyer and seller of a new house. C) the competition between pizza restaurants. D) None of the responses are correct. 11
Which of the following is NOT one of Porter's five forces? A) Power of pressure groups. B) Power of Buyers. C) Power of Sellers. D) Rivalry. 12
If the interest rate is 2.5%, $870 received at the end of 8 years is worth how much today? A) 870/(0.025)8. B) 870/(1 - 0.025)8. C) 870/(1 + 0.025)8. D) None of the responses are correct. 13
Suppose the growth rate of the firm's profit is 3%, the interest rate is 7%, and the current profits of the firm are 150 million dollars: What is the value of the firm? A) $296 million. B) $3,863 million. C) $4,013 million. D) $5,607 million.

Explanation / Answer

9) Option C

=1000/(1+0.04)^3 = 889

10) Option C

11) Option A. Supplier power,buyer power, barriers to entry, rivalry and threat of substitutes

12) Option C

13) Option B

=150/(0.07-0.03) = $3750

13)

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