Module 1 Quiz :Introduction to Corporate Finance (Business Foundations Specialization) Answers 2026

Question 1

Value today of $500,000 received in 20 years at 10% discount rate

❌ 500,000
✅ 74,321.81
❌ 3,363,749
❌ 50,000

Explanation:
Present Value =500,000(1.10)20=74,321.81= \dfrac{500{,}000}{(1.10)^{20}} = 74{,}321.81=(1.10)20500,000​=74,321.81

Question 2

Present value of a $1,000,000 zero-coupon bond in 5 years at 4%

✅ 821,927.11
❌ 40,000
❌ 1,216,652.90
❌ 1,000,000

Explanation:
PV =1,000,000(1.04)5=821,927.11= \dfrac{1{,}000{,}000}{(1.04)^5} = 821{,}927.11=(1.04)51,000,000​=821,927.11

Question 3

Future value after 4 annual deposits of $6,000 at 6%

❌ 24,000
❌ 27,822.56
❌ 30,299.44
✅ 26,247.70

Explanation:
FV of annuity
=6,000×(1.064−1)0.06=26,247.70= 6{,}000 \times \dfrac{(1.06^4-1)}{0.06} = 26{,}247.70=6,000×0.06(1.064−1)​=26,247.70

Question 4

Required annual return to grow $5,000 to $1,000,000 in 34 years

❌ 0.4882
✅ 0.1686
❌ 4.8824
❌ 0.2000

Explanation:
(1+R)34=200⇒R=0.1686(1+R)^{34} = 200 \Rightarrow R = 0.1686(1+R)34=200⇒R=0.1686 (≈16.86%)

Question 5

Price of a 30-year amortizing bond ($1,000 annually) at 3.5%

❌ 2,856.79
✅ 18,392.05
❌ 356.27
❌ 2,806.79

Explanation:
PV of annuity
=1,000×1−1/1.035300.035=18,392.05= 1{,}000 \times \dfrac{1-1/1.035^{30}}{0.035} = 18{,}392.05=1,000×0.0351−1/1.03530​=18,392.05

Question 6

Price of a coupon bond (10 × $1,000 + $100,000) at 3.5%

❌ 89,283.93
❌ 70,891.88
✅ 79,208.485
❌ 8,316.605

Explanation:
PV(coupons) = 8,316.61
PV(principal) = 70,891.88
Total = 79,208.49

Question 7

Amount needed today for four $58,000 tuition payments at 5%

❌ 290,000
❌ 70,499.36
❌ 1,657,142.85
✅ 205,665.13

Explanation:
PV of annuity
=58,000×1−1/1.0540.05=205,665.13= 58{,}000 \times \dfrac{1-1/1.05^4}{0.05} = 205{,}665.13=58,000×0.051−1/1.054​=205,665.13

Question 8

Annual payment on a $431B perpetuity at 4%

❌ 448.24
❌ 107.75
✅ 17.24 Billion Dollars
❌ 10.78

Explanation:
Perpetuity payment = $0.04\times 431=17.24$ billion

Question 9

After-tax interest rate on a 3.85% HELOC with 32% tax rate

✅ 0.026
❌ 0.012
❌ 0.120
❌ 0.308

Explanation:
After-tax rate $=0.0385\times (1-0.32)=0.026$

Question 10

Tuition funding with 35% tax on earnings (5% pre-tax return)

❌ 1,784,615.38
❌ 115,822.98
❌ 205,665.13
✅ 214,309.02

Explanation:
After-tax return = $5\%\times (1-0.35)=3.25\%$
PV of annuity at 3.25% = 214,309.02

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