b . Modify the firm ’ s investment plan to help shareholders achieve a particular time pattern of consumption .
c . Choose high- or low-risk assets to match shareholders ’ risk preferences .
d . Help balance shareholders ’ checkbooks .
But in well-functioning capital markets , shareholders will vote for only one of these goals . Which one ? Why ?
2-9
A . The cost of an automobile is $ 10,000 . If the interest rate is 5 %, how much would you have to set aside now to provide this sum in five years ?
B . You have to pay $ 12,000 a year in school fees at the end of each of the next six years . If the interest rate is 8 %, how much do you set aside today to cover these bills ?
C . You have invested $ 60,476 at 8 %. After paying the above school fees , how much would you remain at the end of six years ?
2-12
What is the PV of $ 100 received in :
A . Year 10 ( at a discount rate of 1 %)
B . Year 10 ( at a discount rate of 13 %)