Quiz Space

Corporate Finance · Quiz 1 · 15 Mar 2026 · January 2026 term

Question 9: Project A pays Rs 500 forever starting next year. Project…

Question 9

+4 marksOne correct option

Project A pays Rs 500 forever starting next year. Project B pays Rs 1,000 forever, starting 10 years from today. If the interest rate is 10%, which project has a higher Present Value (PV) today?

  1. A

    Project A

  2. B

    Project B

  3. C

    Both have equal PV

  4. D

    Cannot be determined

Show answer

Correct answer

  • A

    Project A

See the whole paperTake it as a mock test

Question 9 of 25 in the IIT Madras BS Corporate Finance (Corporate Finance) Quiz 1 paper sat on 15 Mar 2026, in the January 2026 term (Corporate Finance 15 Mar 26). It carries 4 marks.

More questions from this paper

  1. Q1Ria invested Rs 10,000 in a fund that tripled her investment 12 years later. What was the approximate annual rate of in…
  2. Q2The GDP deflator in the economy of Arrakis is 120 in the year 2025. If the Nominal GDP is reported as 24,000 units, wha…
  3. Q3Consider a project with an initial investment of Rs 5,000 in Year 0. It generates cash flows of Rs 3,000 in Year 1 and …
  4. Q4A company’s stock is currently trading at Rs 500. It is expected to pay a dividend of Rs 25 next year. If the required …
  5. Q5An asset earns an annual interest rate of 6% compounded continuously. If you invest Rs 2,000 today, what will be the va…
  6. Q6In the country of Westeros, the nominal interest rate is 10% and the expected inflation rate is 4%. What is the real in…
  7. Q7Which of the following statements regarding the Yield Curve is FALSE?
  8. Q8You take a loan of Rs 2,00,000 at a monthly interest rate of 1% to be repaid over 2 years (24 months). What is the Equa…
  9. Q10Calculate the duration of a bond that pays Rs 500 in 2 years and Rs 1,500 in 4 years.
  10. Q11A consumer basket consists of 2 Apples and 4 Bananas. 2023 (base): Price of Apple = 10, Price of Banana = 5. 2024: Pric…
  11. Q12An investment offers Rs 7,000 in Year 1 and Rs 6,000 in Year 2. If the current cost of this investment is Rs 10,000, wh…
  12. Q13How long will it take to double your money if the interest rate is 8% per annum (compounded annually)?
  13. Q14You save Rs 50 every day and deposit it into a bank account at the end of the day. The bank pays 7.3% annual interest c…
  14. Q15Sahil earns Rs 50,000 in period 1 and Rs 60,000 in period 2. The interest rate is 20%. What is the Maximum Consumption …
  15. Q16A project has the following cash flows: Year 0: -10000, Year 1: 500, Year 2: 1000, Year 3: 1500, Year 4: 2000, Year 5: …
  16. Q17In 2024, the Nominal GDP of a country increased by 10%, while the Real GDP remained constant. This implies:
  17. Q18Consider a 10-year zero-coupon bond that promises to pay 1000 units after 10 years. The annualized interest rate is 5%.…
  18. Q19Your portfolio consists of two "Red" bonds, each with a face value of 100 and a probability of default p =10%. The bond…
  19. Q20You go to an art exhibition in 2026 and see a painting is priced at Rs 2,00,000. You search online and find out that th…
  20. Q21Which of the following yields the highest return on Rs 100 invested for 1 year?
  21. Q22A project earns a total return of 34% over two years. If the return in the first year was 16%, what was the annual retu…
  22. Q23Systematic Investment Plan (SIP) is a popular method of investing by contributing a fixed amount of money at regular in…
  23. Q24You are looking to invest in one new project, and you have three options: Project-A is expected to generate Rs 10 lakh …
  24. Q25Consider a bond that pays Rs 200 in 3 years, Rs 400 in 6 years, Rs 600 in 9 years, Rs 800 in 12 years and Rs 1000 in 15…