# [Solved] The Value of Any Investment Is Found by Computing the

## The value of any investment is found by computing the

A)present value of all future sales.

B)present value of all future liabilities.

C)future value of all future expenses.

D)present value of all future cash flows.

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- Q1:A stockholder's ownership of a company's stock gives her the right to A)vote and be the primary claimant of all cash flows. B)vote and be the residual claimant of all cash flows. C)manage and assume responsibility for all liabilities. D)vote and assume responsibility for all liabilities.
- Q2:Stockholders are residual claimants,meaning that they A)have the first priority claim on all of a company's assets. B)are liable for all of a company's debts. C)will never share in a company's profits. D)receive the remaining cash flow after all other claims are paid.
- Q3:Periodic payments of net earnings to shareholders are known as A)capital gains. B)dividends. C)profits. D)interest.
- Q5:In the one-period valuation model,the value of a share of stock today depends upon A)the present value of both the dividends and the expected sales price. B)only the present value of the future dividends. C)the actual value of the dividends and expected sales price received in one year. D)the future value of dividends and the actual sales price.
- Q6:In the one-period valuation model,the current stock price increases if A)the expected sales price increases. B)the expected sales price falls. C)the required return increases. D)dividends are cut.
- Q7:In the one-period valuation model,an increase in the required return on investments in equity A)increases the expected sales price of a stock. B)increases the current price of a stock. C)reduces the expected sales price of a stock. D)reduces the current price of a stock.
- Q8:In a one-period valuation model,a decrease in the required return on investments in equity causes a(n)________ in the ________ price of a stock. A)increase;current B)increase;expected sales C)decrease;current D)decrease;expected sales
- Q9:Using the one-period valuation model,assuming a year-end dividend of $0.11,an expected sales price of $110,and a required rate of return of 10%,the current price of the stock would be A)$110.11. B)$121.12. C)$100.10. D)$100.11
- Q10:Using the one-period valuation model,assuming a year-end dividend of $1.00,an expected sales price of $100,and a required rate of return of 5%,the current price of the stock would be A)$110.00. B)$101.00. C)$100.00. D)$96.19.
- Q11:In the generalized dividend model,if the expected sales price is in the distant future A)it does not affect the current stock price. B)it is more important than dividends in determining the current stock price. C)it is equally important with dividends in determining the current stock price. D)it is less important than dividends but still affects the current stock price.

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