The value of a future set of cash flows in today's dollars is calculated using: compound...
The value of a future set of cash flows in today's dollars is calculated using:
compound interest
net present value
accounting rate of return
internal rate of return
Homework Answers
Net Present Value
Reason:-
Present value is the current or today's value of the future stream of cash flows.
Future values is discounted using discounting factor that results in present value.
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The value of a future set of cash flows in today's dollars is
calculated using:
compound...
A. The excess of the present value of future cash flows over the initial investment outlay...
A. The excess of the present value of future cash flows over the initial investment outlay for a project is the: 1. Internal rate of return (IRR) of the project 2. Modified internal rate of return (MIRR) on the project 3. Book (accounting) rate of return for the project 4. Net present value (NPV) of the project 5. Modified internal rate of return (MIRR) of the project B. Items that have cash flow effects during the operating phase of an...
D G H L 6.1. Future value with multiple cash flows: Konerko, Inc., expects to earn...
D G H L 6.1. Future value with multiple cash flows: Konerko, Inc., expects to earn cash flows of $13,227, $15,611, 518,970, and $19,114 over the next four years. If the company uses an 8 percent discount rate, what is the future value of these cash flows at the end of year 4? 6.4. Present value with multiple cash flows: Saul Cervantes has just purchased some equipment for his landscaping business. For this equipment he must pay the following amounts...
Consider the following project's after-tax cash flow in today's dollars: Year 0 1 2 3 Cash...
Consider the following project's after-tax cash flow in today's dollars: Year 0 1 2 3 Cash flow in Constant Dollars -$60,000 $25,000 $25,000 $35,000 a] Convert the cash flows from constant dollars (in the value of year 0) into equivalent current dollars with the base year being the present. Inflation rate is 2%. b) If the annual real interest rate is 5%, what is the present equivalent of the cash flow?
Part Two Net Present Value Method Net present value (NPV) is one method that can be...
Part Two Net Present Value Method Net present value (NPV) is one method that can be used to evaluate the fihancial viability of potential projects. It determines the present value of all future cash flows associated with potential projects and measures this against the cost of the project. To use net present value, a required rate of return must be defined. The required rate of return is the minimum acceptable rate of return that an investment must yield for it...
1. Compound interest method refers to: Interest is calculated only on the original principle b. Interest...
1. Compound interest method refers to: Interest is calculated only on the original principle b. Interest is calculated on a dollar received today the original principle and on all interest accumulated since the Interest is calculated on both the original principle and on all interes beginning of interest period. d. All of the Above 2. Discounting is: a. Converting present value into its future value b. Value today of a payment to be received c. Calculating the future value using...
A discounting procedure providing a common base of comparison for alternative cash flows is the: Discount rate Accountin...
A discounting procedure providing a common base of comparison for alternative cash flows is the: Discount rate Accounting rate of return Net present value Compound interest
The computation of the current value of an asset using the present value of future cash...
The computation of the current value of an asset using the present value of future cash flows method does not include the A. Productive life of the asset. B. Applicable interest rate. C. Future amounts of cash receipts or cash savings. D. Cost of alternate uses of funds given up.
Problem 14.026: Calulate PW for a mix of CV-$ and future-$ cash flows Some of the...
Problem 14.026: Calulate PW for a mix of CV-$ and future-$ cash flows Some of the following future cash flows have been expressed in then-current (future) dollars and others in CV dollars. Use an interest rate of 9% per year and an inflation rate of 3% per year. Find the present worth with all cash flows expressed in future dollars. Year Cash flow. $ Expressed as 15,500 33,500 Then-current 14,100 Then-current 26,700 CV CV The present worth with all cash...
Mastery Problem: Net Present Value and Internal Rate of Return Part One Companies use capital investment...
Mastery Problem: Net Present Value and Internal Rate of Return Part One Companies use capital investment analysis to evaluate long-term investments. Capital investment evaluation methods that use present values are (1) Net present value method (NPV) and (2) Internal rate of return (IRR) method. Methods That Use Present Values Of the two capital investment evaluation methods, a defining characteristic NPV and IRR is that they consider the time value of money. This means that money tomorrow is worth less than money today....
Which one of the following statements is correct? a) The net present value is a measure...
Which one of the following statements is correct? a) The net present value is a measure of profits expressed in today's dollars. b) The net present value is positive when the required return exceeds the internal rate of return. c) If the initial cost of a project is increased, the net present value of that project will also increase. d) Net present value is equal to an investment's cash inflows discounted to today's dollars.
D G H L 6.1. Future value with multiple cash flows: Konerko, Inc., expects to earn cash flows of $13,227, $15,611, 518,970, and $19,114 over the next four years. If the company uses an 8 percent discount rate, what is the future value of these cash flows at the end of year 4? 6.4. Present value with multiple cash flows: Saul Cervantes has just purchased some equipment for his landscaping business. For this equipment he must pay the following amounts...
Consider the following project's after-tax cash flow in today's dollars: Year 0 1 2 3 Cash flow in Constant Dollars -$60,000 $25,000 $25,000 $35,000 a] Convert the cash flows from constant dollars (in the value of year 0) into equivalent current dollars with the base year being the present. Inflation rate is 2%. b) If the annual real interest rate is 5%, what is the present equivalent of the cash flow?
Part Two Net Present Value Method Net present value (NPV) is one method that can be used to evaluate the fihancial viability of potential projects. It determines the present value of all future cash flows associated with potential projects and measures this against the cost of the project. To use net present value, a required rate of return must be defined. The required rate of return is the minimum acceptable rate of return that an investment must yield for it...
1. Compound interest method refers to: Interest is calculated only on the original principle b. Interest is calculated on a dollar received today the original principle and on all interest accumulated since the Interest is calculated on both the original principle and on all interes beginning of interest period. d. All of the Above 2. Discounting is: a. Converting present value into its future value b. Value today of a payment to be received c. Calculating the future value using...
Problem 14.026: Calulate PW for a mix of CV-$ and future-$ cash flows Some of the following future cash flows have been expressed in then-current (future) dollars and others in CV dollars. Use an interest rate of 9% per year and an inflation rate of 3% per year. Find the present worth with all cash flows expressed in future dollars. Year Cash flow. $ Expressed as 15,500 33,500 Then-current 14,100 Then-current 26,700 CV CV The present worth with all cash...
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