Question

The business plan for KnowIt, LLC, a start-up company that manufactures portable multi-gas detectors, showed equivalent...

The business plan for KnowIt, LLC, a start-up company that manufactures portable multi-gas detectors, showed equivalent annual cash flows of $400,000 for the first 5 years. If the cash flow in year 1 was $305,000 and the constant increase thereafter was $50,000 per year, what interest rate was used in the calculation?

0 0
Add a comment Improve this question Transcribed image text
Answer #1

|_ A B C D E - NM + 95000 Equivalent annual Incremantal cash flows Cash flow Difference 400000 305000 400000 355000 45000 400

EXCEL FORMULA:

Year Equivalent annual cash flows 400000 400000 400000 400000 400000 Incremantal Cash flow 305000 =D3+50000 =D4+50000 =D5+500

Add a comment
Know the answer?
Add Answer to:
The business plan for KnowIt, LLC, a start-up company that manufactures portable multi-gas detectors, showed equivalent...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

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
  • The business plan for KnowIt, LLC, a start-up company that manufactures portable multigas detectors, showed equivalent...

    The business plan for KnowIt, LLC, a start-up company that manufactures portable multigas detectors, showed equivalent annual cash flows of $400,000 for the first 5 years. If the cash flow in year 1 was $319,000 and the constant increase thereafter was $50,000 per year, what interest rate was used in the calculation? The interest rate used in the calculation was ______ %

  • 7. You start up a new business and your minimum expected return on capital is 10%. You expect after tax cash flows of $...

    7. You start up a new business and your minimum expected return on capital is 10%. You expect after tax cash flows of $50,000 one year from now and $100,000 starting two years from now and projected to continue for each year thereafter lasting out to year 10. How much can you afford to pay to invest in the business?

  • AVZ is a​ start-up company who is using all its cash to growth so it does...

    AVZ is a​ start-up company who is using all its cash to growth so it does not plan to pay dividends for the next 6 years. The company then plans to start paying annual cash dividends starting in year 7 of ​$6.00 for 10 years. ​ Thereafter, the company will assume a constant growth dividend policy and the estimated growth rate in dividends forever after that point is 2​%. The price of the stock is set to yield a return...

  • AVZ is a start-up company who is using all its cash to growth so it does...

    AVZ is a start-up company who is using all its cash to growth so it does not plan to pay dividends for the next 5 years. The company then plans to start paying annual cash dividends starting in year 6 of $6.00 for 12 years. Thereafter, the company will assume a constant growth dividend policy and the estimated growth rate in dividends forever after that point is 2%. The price of the stock is set to yield a return of...

  • AVZ is a start-up company who is using all its cash to growth so it does...

    AVZ is a start-up company who is using all its cash to growth so it does not plan to pay dividends for the next 4 years. The company then plans to start paying annual cash dividends starting in year 5 of $4.00 for 12 years. Thereafter, the company will assume a constant growth dividend policy and the estimated growth rate in dividends forever after that point is 3%. The price of the stock is set to yield a return of...

  • On July 2, 2019, you decided to start up a new business – SmartReader Inc., an...

    On July 2, 2019, you decided to start up a new business – SmartReader Inc., an off-campus bookstore where students can buy textbooks and supplies at reduced prices. The following are summary transactions for the period July 2, 2019 to October 31, 2019, the company’s year end. You and several other shareholders invested $20,000 in return for shares in the company. A suitable location is found and rent is $1,000 per month. The lease agreement is for one year (i.e.,...

  • Expert Q&A Done On July 2, 2019, you decided to start up a new business -...

    Expert Q&A Done On July 2, 2019, you decided to start up a new business - Smart Reader Inc., an off- campus bookstore where students can buy textbooks and supplies at reduced prices. The following are summary transactions for the period July 2, 2019 to October 31, 2019, the company's year end. 1. You and several other shareholders invested $20,000 in return for shares in the company 2. A suitable location is found and rent is $1,000 per month. The...

  • The Lake Charles Chemicals LLC is considering investing in a new gas to liquids technology. R&D...

    The Lake Charles Chemicals LLC is considering investing in a new gas to liquids technology. R&D scientists and engineers are investigating a new liquid-based catalyst system that will enable to operate the reactor at lower temperature and pressure to achieve higher conversion efficiencies. The company expects a three-year R&D period before they start producing the product as a commercial commodity. The following financial information is presented for management review. • R&D Cost: $6.5 million over a three-year period: $1 million...

  • Boyd Company has a line of credit with State Bank. Boyd can borrow up to $400,000...

    Boyd Company has a line of credit with State Bank. Boyd can borrow up to $400,000 at any time over the course of the 2018 calendar year. The following table shows the prime rate expressed as an annual percentage along with the amounts borrowed and repaid during 2018. Boyd agreed to pay interest at an annual rate equal to 2 percent above the bank’s prime rate. Funds are borrowed or repaid on the first day of each month. Interest is...

  • What is an annuity? Select one: a. present worth of a series of equal payments. b....

    What is an annuity? Select one: a. present worth of a series of equal payments. b. a single payment. c. a series of payments that changes by a constant amount from one period to the next. d. a series of equal payments over a sequence of equal periods. e. a series of payments that changes by the same proportion from one period to the next. Question 2 The present worth factor Select one: a. gives the future value equivalent to...

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