3) An investment project generates a cash flows of $3 million at the end of each...

Question

Question

Answer 1

Answer #1

Calculation of Future value of cashflows
Year	Cashflows	Interest rate [email protected]%	Compounded Cashflows
A	B	C = (1+8.3%)^n	*D = BC**
1	3000000	2.049538636	6148615.908
2	3000000	1.892464114	5677392.343
3	3000000	1.747427622	5242282.865
4	3000000	1.613506576	4840519.728
5	3000000	1.489849101	4469547.302
6	3000000	1.375668606	4127005.819
7	3000000	1.270238787	3810716.361
8	3000000	1.172889	3518667
9	3000000	1.083	3249000
10	3000000	1	3000000
Future value of Cashflows			44083747.33

Note:
Interest rate factor calculation
first cahflow occurred at the end of first year and interest can be earned till 10th year
(i.e. 9 years ). Interest rate factor is (1+8.3%)^9 = 2.049538636
Lekewise 10th year cashflow occur at the end of year and interest is not earned as we
are finding future value at the end of 10th year

Answer 2

Similar Homework Help Questions

A project requires an initial investment of $6 million and will yield operating cash flows of...

A project requires an initial investment of $6 million and will yield operating cash flows of $1.5 million per year for the next 10 years. At the end of 10 years, the project’s assets can be divested for $350,000. The marginal tax rate is 35%, and the CCA rate is 30%. If the required rate of return is 15%, what is the present value of the CCA tax shields?
A project generates a cash flow of $499,900.00 per year (end of year cash flows). If...

A project generates a cash flow of $499,900.00 per year (end of year cash flows). If the project can last 13.00 more years, what is its value TODAY of the remaining cash flows if the cost of capital is 9.00%?
You have just purchased an investment that generates the following cash flows for the next four...

You have just purchased an investment that generates the following cash flows for the next four years. You are able to reinvest these cash flows at 13.2 percent, compounded ankually. End of year 1. $3,644 2. $2,697 3. $445 4. $3,696 What is the present value of this investment if 13.2 percent per year is the appropriate discount rate?

You have just purchased an investment that generates the following cash flows for the next four...

You have just purchased an investment that generates the following cash flows for the next four years. You are able to reinvest these cash flows at 6.6 percent, compounded annually. End of year 1. $2,566 2. $3,895 3. $239 4. $2,378 What is the present value of this investment if 6.6 percent per year is the appropriate discount rate? Round the answer to two decimal places.
You have just purchased an investment that generates the following cash flows for the next four...

You have just purchased an investment that generates the following cash flows for the next four years. You are able to reinvest these cash flows at 8.7 percent, compounded annually. End of year 1. $3,853 2. $1,862 3. $953 4. $2,011 What is the present value of this investment if 8.7 percent per year is the appropriate discount rate? Round the answer to two decimal places.
Flows Wells, Inc., has identified an investment project with the following cash flows. If the discount...

Flows Wells, Inc., has identified an investment project with the following cash flows. If the discount rate is 8 percent, what is the future value of these cash flows in Year 4? What is the future value at an interest rate of 11 percent? At 24 percent? Year Cash Flow: 1 $865 2 1,040 3 1,290 4 1,385 3. Future Value and Multiple Cash Flows Wells, Inc., has identified an investment project with the following cash flows. If the discount...

You are given an investment to analyze. The cash flows from this investment are End of...

You are given an investment to analyze. The cash flows from this investment are End of year 1. $1,204 2. $3.980 3. $993 4. $3,230 5. $817 What is the future value of this investment at the end of year five if 17.82 percent per year is the appropriate interest (discount) rate? Round the answer to two decimal places.
Present Value and Multiple Cash Flows [LO1] Seaborn Co. has identified an investment project with the...

Present Value and Multiple Cash Flows [LO1] Seaborn Co. has identified an investment project with the following cash flows. If the discount rate is 1O perent. (Questios what is the present value of these cash flows? What is the present value at 18 percent? At 24 percent? 1. BASIC Questions 1-1 Cash Flow $ 950 1,040 1,130 1,075 Year 2. Present Value and Multiple Cash Flows [LO1] Investment X offers to pay you $6,000 per year for nine years, whereas...
(1)Your firm has identified three potential investment projects. The projects and their cash flows are shown...

(1)Your firm has identified three potential investment projects. The projects and their cash flows are shown here (Project Cash Flow Today ($) Cash Flow in One Year ($)) A -10- 20 B 5 -5 C 20 -10 Suppose all cash flows are certain and the risk-free interest rate is 10%. a. What is the NPV of each project? b. If the firm can choose only one of these projects, which should it choose? c. If the firm can choose any...

Herlige Narren AS has identified an investment project with the following cash flows. Assume all the...

Herlige Narren AS has identified an investment project with the following cash flows. Assume all the cash flows have occurred at the beginning of the year. (Do not round intermediate steps. Round your answer to 2 decimal places. The program includes a margin of error of +/-1%.) Year 2 4 Cash Flow 960 1,190 1,540 1,900 Requirement 1: If the discount rate is 9 per cent, what is the future value of these cash flows at the end of year...