Question

Please answer them correctly. Here are short 3 problems. Please solve all 3 problems. I would really appreciate your effort. Thanks.

1. Cullumber Corp had sales of $336,000 in 2017. If management expects its sales to be $476,450 in 6 years, what is the rate at which the company’s sales are expected to grow? (If you solve this problem with algebra round intermediate calculations to 4 decimal places, in all cases round your final answer to 2 decimal places, e.g. 8.72%.)

Growth Rate _____?

2. Ivanhoe, Inc., management expects the company to earn cash flows of $12,700, $15,100, $18,200, and $19,500 over the next four years. If the company uses an 9 percent discount rate, what is the future value of these cash flows at the end of year 4? (Round answer to 2 decimal places, e.g. 15.25. Do not round factor values.)

Future Value $_____?

3. Jason Allen borrowed some money from his friend and promised to repay him $1,230, $1,330, $1,550, $1,620, and $1,620 over the next five years. If the friend normally discounts investment cash flows at 7.5 percent annually, how much did Jason borrow? (Round answer to 2 decimal places, e.g. 15.25. Do not round factor values.)

Present value $_____?

Answer 1

1)	Growth rate	5.99%
Working:
	Future value		=	Present Value *(1+i)^n			Where,
	$       4,76,450		=	336000*(1+i)^6			i	Growth rate
	1.4180		=	(1+i)^6			n	time
	1.4180	^ (1/6)	=	1+i
	1.0599		=	1+i
	i		=	0.0599
2)	Future value		$ 73,725.18
Working:
Year	Cash flows	Future value of 1	Future value of cash flows
a	b	c=1.09^(4-a)	d=b*c
1	$           12,700	1.295	$ 16,446.87
2	$           15,100	1.188	$ 17,940.31
3	$           18,200	1.090	$ 19,838.00
4	$           19,500	1.000	$ 19,500.00
	Total		$ 73,725.18
3)	Present value		$   5,884.25
Working:
Year	Cash flows	Present value of 1	Present value of cash flows
a	b	c=1.075^-a	d=b*c
1	$             1,230	0.930233	$   1,144.19
2	$             1,330	0.865333	$   1,150.89
3	$             1,550	0.804961	$   1,247.69
4	$             1,620	0.748801	$   1,213.06
5	$             1,620	0.696559	$   1,128.42
	Total		$   5,884.25