Question

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 Investment Y offers to pay you $8.,000 per year for six years. Which of these cash flow streams has the higher present value if the discount rate is 5 percent? If the discount rate is 15 percent? 3. Future Value and Multiple Cash Flows [LO1] Paradise, Inc., has identified an X 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 a discount rate of 11 percent? At 24 percent? Cash Flow $940 1,090 1,340 1,405 Year Calculating Annuity Present Value [LO1] An investment offers $5,300 per year for 15 years, with the first payment occurring one year from now. If the required return is 7 percent, what is the value of the investment? What would the value be if the payments occurred for 40 years? For 75 years? Forever? Calculating Annuity Cash Flows [L01] If you put up $34,000 today in exchange for a 7.65 percent, 15-year annuity, what will the annual cash flow be? 4. 5.

Answer 1