Question

Swanky Beverage Co. expects the following cash flows from its manufacturing plant in Palau over the next 4 years: Study Tools
1 0
Add a comment Improve this question Transcribed image text
Answer #1

C.$12,517,469.

present value factor = 1 /(1+r)^n

here,

r=7.5%

=>0.075.

n=1,2,3,4.

year cash flow present value factor cash flow * present value factor
1 1,200,000 1/(1.075)^1=>0.93023256 (1,200,000*0.93023256)=>1,116,279.07
2 3,500,000 1/(1.075)^2=>0.86533261 (3500000*0.86533261)=>3,028,664.14
3 5,750,000 1/(1.075)^3=>0.80496057 (5,750,000*0.80496057)=>4,628,523.28
4 5,000,000 1/(1.075)^4=>0.74880053 (5,000,000*0.74880053)=>3,744,002.65
present value of cash flows $12,517,469

second part;

Uneven cash flows Annuity payments
monthly apartment rent yes
matching contribution of each employee towards retirement yes
promise to pay 10% of profits yes
commitment to contribute $600 in a fixed interest bearing account yes
Add a comment
Know the answer?
Add Answer to:
Swanky Beverage Co. expects the following cash flows from its manufacturing plant in Palau over the...
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 Purple Lion Beverage Company expects the following cash flows from its manufacturing plant in Palau...

    The Purple Lion Beverage Company expects the following cash flows from its manufacturing plant in Palau over the next five years Annual Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5 $250,000 $37,500 $180,000 $450,000 $350,000 The CFO of the company believes that an appropriate annual interest rate on this investment is 6.5%. What is the present value of this uneven cash flow stream, rounded to the nearest whole dollar? $1,425,000 $467,500 $1,642,500 $1,022,070 Identify whether the situations described in the following table are...

  • A series of cash flows may not always necessarily be an annuity. Cash flows can also...

    A series of cash flows may not always necessarily be an annuity. Cash flows can also be uneven and variable in amount, but the concept of the time value of money will continue to apply. Consider the following case: The Purple Lion Beverage Company expects the following cash flows from its manufacturing plant in Palau over the next five years! Annual Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5 $100,000 $20,000 $480,000 $450,000 $550,000 The CFO...

  • Please help this is for a grade!! A series of cash flows may not always necessarily...

    Please help this is for a grade!! A series of cash flows may not always necessarily be an annuity. Cash flows can also be uneven and variable in amount, but the concept of the time value of money will continue to apply. Consider the following case: The Purple Lion Beverage Company expects the following cash flows from its manufacturing plant in Palau over the next four years: Annual Cash Flows Year 3 Year 1 Year 2 Year 4 $37,500 $180,000...

  • Consider the case of the following annuities, and the need to compute either their expected rate...

    Consider the case of the following annuities, and the need to compute either their expected rate of return or duration. 1. Matthew needed money for some unexpected expenses, so he borrowed $2,587.09 from a friend and agreed to repay the loan in three equal installments of $950 at the end of each year. The agreement is offering an implied interest rate of   . 2. Matthew’s friend, Gregory, has hired a financial planner for advice on retirement. Considering Gregory’s current expenses...

  • please show on a ba texas instrument calculator 8. Uneven cash flows A series, or stream,...

    please show on a ba texas instrument calculator 8. Uneven cash flows A series, or stream, of cash flows may not always necessarily be an annuity. Cash flows can also be uneven and nonconstant, but the concept of the time value of money applies to uneven cash flows as well Consider the following case: Swanky Beverage Co. expects the following cash flows from its manufacturing plant in Palau over the next 5 years: Year Annual Cash Flows $4,100,000 $5,000,000 $3,000,000...

  • Consider the following case: The Purple Lion Beverage Company expects the following cash flows from its...

    Consider the following case: The Purple Lion Beverage Company expects the following cash flows from its manufacturing plant in Palau over the next six years: Annual Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $400,000 $37,500 $480,000 $450,000 $550,000 $375,000 The CFO of the company believes that an appropriate annual interest rate on this investment is 4%. What is the present value of this uneven cash flow stream, rounded to the nearest whole dollar?

  • A series of cash flows may not always necessarily be an annuity. Cash flows can also...

    A series of cash flows may not always necessarily be an annuity. Cash flows can also be uneven and variable in amount, but the concept of the time value of money will continue to apply Consider the following case: The Purple Lion Beverage Company expects the following cash flows from its manufacturing plant in Palau over the next four years: Annual Cash Flows Year 1 Year 2 Year 3 Year 4 $250,000 $20,000 $330,000 $300,000 The CFO of the company...

  • Paper Flyer Co. expects the following cash flows from its manufacturing plant in India over the...

    Paper Flyer Co. expects the following cash flows from its manufacturing plant in India over the next 6 years Year Annual Cash Flows 1 $5,000,000 2 $2,750,000 3 $3,750,000 4 $6,400,000 5 $6,800,000 6 $4,500,000 The CFO of the company believes that an appropriate annual interest rate on this investment is 7.5%. What is the present value of this uneven cash flow stream ? $15,921,988 $29,200,000 $22,494,179 $22,700,000

  • 10. Uneven cash flows A Aa E A series of cash flows may concept of the...

    10. Uneven cash flows A Aa E A series of cash flows may concept of the time valu s necessarily be an annuity. Cash flows can also be uneven and variable in amount, but the Il continue to apply Consider the following case: The Purple Lion Beverage Company expects the following cash flows from its manufacturing plant in Palau over the next six years: Year 1 Year 2 Annual Cash Flows Year 4 $180,000 $450,000 Year 3 Year 6 $375,000...

  • CENGAGE | MINDTAP Q se Assignment 04 - Time Value of Money The Purple Lion Beverage...

    CENGAGE | MINDTAP Q se Assignment 04 - Time Value of Money The Purple Lion Beverage Company expects the following cash flows from its manufacturing plant in Palau over the next five years: Year 1 $100,000 Annual Cash Flows Year 2 Year 3 $37,500 $480,000 Year 4 $300,000 Year 5 $550,000 The CFO of the company believes that an appropriate annual interest rate on this investment is 6.5%. What is the present value of this uneven cash flow stream, rounded...

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