Present value of cash flows = Future cash flow/(1+Discount rate)^Number of Years
= 500/(1.08)^2 + 500/(1.08)^3 + 1500/(1.08)^4 + 1500/(1.08)^5
= $2,949.005
i.e. $2,949
Cash flow diagrams are used to illustrate cash inflow and outflows over a period of time....
30 points) Cash flow diagrams required A makes the two cash flows equivalent at 12% interest rate compounded scount each CFD to present. The present value of the first cash flow is equal to Problem 3 of 3 What value of "Am yearly? Hint, discount the present value of the se esent value of the second cash flow A A A A A 120 120 120 100 100 0 1 5 years 2 3 4
Problem 24-5A Payback period, break-even time, and net present value LO P1, A1 Sentinel Company is considering an investment in technology to improve its operations. The investment will require an initial outlay of $252,000 and will yield the following expected cash flows. Management requires investments to have a payback period of 3 years, and it requires a 10% return on investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the table...
Suppose you are evaluating a project with the cash inflows shown in the following table. Your boss has asked you to calculate the project’s net present value (NPV). You don’t know the project’s initial cost, but you do know the project’s regular, or conventional, payback period is 2.50 years.The project's annual cash flows are:YearCash FlowYear 1$375,000Year 2450,000Year 3300,000Year 4400,000If the project’s desired rate of return is 9.00%, the project’s NPV—rounded to the nearest whole dollar—is .Which of the following...
draw time lines for a and b 9.2 Consider the following net cash flows: Year Cash Flow ($) 250 400 500 600 600 a. What is the net present value if the opportunity cost of capital (discount rate) is 10 percent? b. Add an outflow (or cost) of $1,000 at time o. Now, what is the net present value?
16. You are scheduled to receive a $1,000 cash flow in one year and receive a $1,250 cash flow in 3 years. If interest rates are 8.75% per year, what is the combined present value of these cash flows? A. $2,056.94 B. $1,976.48 C. $1,891.44 D. $1,817.46 E. $1,789.92 17. You are scheduled to receive a $950 cash flow in one year, receive a $1,000 cash flow in two years, pay a $500 payment in three years and pay a...
8. Delia Landscaping has the following Cash Flow from Assets over a 4-year period. Year 0 Year 1 Year 2 Year 3 Year 4 $-65,442 $164,153 $144,575 $165,591 $155,157 What is the net present value of the company at a discount rate of 12%? Calculation: (NOTE: For time value of money calculations, show the calculator key and the calculated input).
The time line below contains an annuity with cash flow at the end of each period. $1,000 $1,000 $1,000 $1,000 0 1 2 3 4 5 The periodic market interest rate is 12%. From the perspective of a potential investor at time 0 (zero), what type of annuity is described in the time line? _________________ What is the total present value of the annuity at the end of period 1 (one)? _________________ What is the total...
The time line below contains an annuity with cash flow at the end of each period. $1,000 $1,000 $1,000 $1,000 0 1 2 3 4 The periodic market interest rate is 12%. From the perspective of a potential investor at time 0 (zero), what type of annuity is described in the time line? _________________ What is the total present value of the annuity at time 0 (zero)? _________________
Calculate the present value of a growing perpetuity with the first cash flow (occurring in one year) being $10 million and every subsequent year’s cash flow growing at a constant 6% rate (i.e, the cash flow at the end of two years is $10M(1.06) = $10.6 million, the cash flow at the end of three years is 10M(1.06)^2 = $11.236 million, etc.). The cost of capital for this calculation is 12%. The firm has to spend $50 million immediately and...