ZuoTi.Pro
Question

Oriole Telecommunications Corp. has made an investment in another company that will guarantee it a cash...

Oriole Telecommunications Corp. has made an investment in another company that will guarantee it a cash flow of $21,500 each year for the next five years. If the company uses a discount rate of 19 percent on its investments, what is the present value of this investment? (Round factor values to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25.)

Present value of investment $
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Present value = Future value*Present value annuity factor

= 21,500*PVAF(19%, 5 years)

= 21500*3.0576

= $65,738.4

Hence, present value of investment = $65,738.4

0 0
Add a comment
Know the answer?
Add Answer to:
Oriole Telecommunications Corp. has made an investment in another company that will guarantee it a cash...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • AAA Insurance Co. has made an investment that will generate a cash flow of $38,000 each...

    AAA Insurance Co. has made an investment that will generate a cash flow of $38,000 each year for the next five years. If the company uses a discount rate of 14 percent on its investments, what is the present value of this investment?

  • AAA Insurance Co. has made an investment that will generate a cash flow of $38,000 each...

    AAA Insurance Co. has made an investment that will generate a cash flow of $38,000 each year for the next five years. If the company uses a discount rate of 14 percent on its investments, what is the present value of this investment?

  • The Oriole Products Co. currently has debt with a market value of $275 million outstanding. The...

    The Oriole Products Co. currently has debt with a market value of $275 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) which have a maturity of 15 years and are currently priced at $1,429.26 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $14 per share. The preferred shares pay an annual dividend of $1.20. Oriole also has 14 million shares of common stock outstanding...

  • An investment opportunity requires a payment of $990 for 12 years, starting a year from today....

    An investment opportunity requires a payment of $990 for 12 years, starting a year from today. If your required rate of return is 10.0 percent, what is the value of the investment to you today? (Round factor values to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25.) Present value of investment $

  • Rockinghouse Corp. management plans to issue seven-year zero coupon bonds. It has learned that these bonds...

    Rockinghouse Corp. management plans to issue seven-year zero coupon bonds. It has learned that these bonds will sell today at a price of $365.13. Assuming annual coupon payments, what is the yield to maturity on these bonds? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.) Electrolex, Inc., has four-year bonds outstanding that pay a coupon rate of 12.76 percent and make coupon payments semiannually. If these bonds are currently selling...

  • Oriole Ltd. has issued bonds that never require the principal amount to be repaid to investors....

    Oriole Ltd. has issued bonds that never require the principal amount to be repaid to investors. Correspondingly, Oriole must make interest payments into the infinite future. If the bondholders receive annual payments of $95 and the current price of the bonds is $1,000.00. What is the pre-tax cost of this debt? (Round answer to 2 decimal places, e.g. 15.25%.) Pre-tax cost of debt % What is the after-tax cost of this debt for Oriole if the firm is in the...

  • Kintel, Inc., management wants to raise $1 million by issuing six-year zero coupon bonds with a...

    Kintel, Inc., management wants to raise $1 million by issuing six-year zero coupon bonds with a face value of $1,000. The company’s investment banker states that investors would use an 12.38 percent discount rate to value such bonds. Assume semiannual coupon payments. At what price would these bonds sell in the marketplace? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and Bond price to 2 decimal places, e.g. 15.25) How many bonds would the firm have to issue to...

  • Bill Zimmerman is evaluating two new business opportunities. Each of the opportunities shown below has a...

    Bill Zimmerman is evaluating two new business opportunities. Each of the opportunities shown below has a ten-year life. Bill uses a 11% discount rate. Option 1 Option 2 Equipment purchase and installation $72,000 $83,270 Annual cash flow $28,800 $30,860 Equipment overhaul in year 3 $4,620 - Equipment overhaul in year 5 - $5,990 Calculate the net present value of the two opportunities. (Round present value factor calculations to 4 decimal places, e.g. 1.2514 and the final answers to 0 decimal...

  • Wainright Co. has identified an investment project with the following cash flows. Year Cash Flow $...

    Wainright Co. has identified an investment project with the following cash flows. Year Cash Flow $ 720 1 2 930 1,190 1,275 4 If the discount rate is 10 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Present value What is the present value at 18 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g.,...

  • Please Answer the following questions: 1. The required rate of return is 24.40 percent. Oriole Corp....

    Please Answer the following questions: 1. The required rate of return is 24.40 percent. Oriole Corp. has just paid a dividend of $3.12 and is expected to increase its dividend at a constant rate of 6.35 percent. What is the expected price of the stock three years from now? (Round answer to 2 decimal places, e.g. 15.20.) Expected Price ? 2. Thomas Taylor is interested in purchasing the common stock of Sandhill, Inc., which is currently priced at $39.99. The...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT