Question

In: Finance

You are presented with an investment opportunity that will give you the following stream of cash flows:

You are presented with an investment opportunity that will give you the following stream of cash flows: nothing for the next 5 years; at the following year, an amount of $2,000 per year until year 13; and then an amount of $10,000 per year until year 23. If your required rate of return (APR) is 8% compounded annually, what is the present value today of these cash flows?

Do not use the $ sign. Use commas to separate thousands. Use to decimals. Round to the nearest dollar. For example if you obtain $1,432.728 then enter1,433;  if you obtain $432.00 then enter432

Answer:________

Solutions

Expert Solution

Present value=Cash flows*Present value of discounting factor(rate%,time period)

=2000/1.08^6+2000/1.08^7+2000/1.08^8+2000/1.08^9+2000/1.08^10+2000/1.08^11+2000/1.08^12+2000/1.08^13+10,000/1.08^14+10,000/1.08^15+10,000/1.08^16+10,000/1.08^17+10,000/1.08^18+10,000/1.08^19+10,000/1.08^20+10,000/1.08^21+10,000/1.08^22+10,000/1.08^23

which is equal to

=32,495(Approx)

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

You are presented with an investment opportunity that will give you the following stream of cash...
You are presented with an investment opportunity that will give you the following stream of cash flows: nothing for the next 5 years; at the following year, an amount of $3,000 per year until year 10; and then an amount of $8,000 per year until year 25. If your required rate of return (APR) is 12% compounded annually, what is the present value today of these cash flows?
You are presented with an investment opportunity that will give you the following stream of cash...
You are presented with an investment opportunity that will give you the following stream of cash flows: nothing for the next 2 years; at the following year, an amount of $5,000 per year until year 14; and then an amount of $8,000 per year until year 22. If your required rate of return (APR) is 9% compounded annually, what is the present value today of these cash flows?
The OMEGA Corporation has been presented with an investment opportunity that will yield cash flows of...
The OMEGA Corporation has been presented with an investment opportunity that will yield cash flows of $60,000 per year in Years 1 through 4, $70,000 per year in Years 5 through 9, and $80,000 in Year 10. This investment will cost the firm $300,000 today, and the firm’s cost of capital is 10 percent. Assume cash flows occur evenly during the year, 1/365th each day. What is the payback period for this investment? a. 5.23 years b. 4.86 years c....
Find the present value of the following stream of cash flows, assuming that the firm's opportunity...
Find the present value of the following stream of cash flows, assuming that the firm's opportunity cost is 12 percent. What would be the future value of those cash flows? Year Amount 1 $10,000 2 35,000 3 24,000 4 53,000
The Seattle Corporation has been presented with an investment opportunity which will yield cash flows of​...
The Seattle Corporation has been presented with an investment opportunity which will yield cash flows of​ $30,000 per year in Years 1 through​ 4, $35,000 per year in Years 5 through​ 9, and​ $40,000 in Year 10. This investment will cost the firm​ $100,000 today, and the​ firm's cost of capital is​ 10%. Assume cash flows occur evenly during the year. The discounted payback period is A. 3.72 years. B. 4.26 years. C. 5.23 years. D. 4.35 years.
Home Depot has been presented with an investment opportunity that will yield end-of-year cash flows of...
Home Depot has been presented with an investment opportunity that will yield end-of-year cash flows of $45,000 per year in years 1 through 4, $38,000 per years 5 through 9, and $42,000 in year 10. This investment will cost the firm $185,000 today, and the firm's cost of capital is 6%. What is the NPV for this investment? Please include formula and numbers used.
The Terug Corporation has been presented with an investment opportunity which will yield end-of-year cash flows...
The Terug Corporation has been presented with an investment opportunity which will yield end-of-year cash flows of $30,000 per year in Years 1 through 4, $35,000 per year in Years 5 through 9, and $40,000 in Year 10. This investment will cost the firm $150,000 today, and the firm's cost of capital is 10 percent. What are the NPV, IRR and MIRR values for this investment? a. NPV $135,984; IRR 17.07%; MIRR 11.27% b. NPV $18,023; IRR 16.24%: MIRR 13.27%...
Value of a mixed stream For the mixed stream of cash flows shown in the following​...
Value of a mixed stream For the mixed stream of cash flows shown in the following​ table, LOADING...​, determine the future value at the end of the final year if deposits are made into an account paying annual interest of 13​%, assuming that no withdrawals are made during the period and that the deposits are​ made: 1              30,300 2              25,250 3              20,200 4              10,100 5              5,050 a. At the end of each year. b. At the beginning of each year....
The following are the mixed stream of cash flows for project A and project B: Cash...
The following are the mixed stream of cash flows for project A and project B: Cash flow stream (in rands) Year A B 1 50 000 10 000 2 45 000 25 000 3 35 000 35 000 4 25 000 45 000 5 10 000 50 000 Totals 165 000 165 000 Required: 5.1. Find the present value of each stream, using a 12% discount rate. [6] 5.2. Compare the calculated present values and discuss them in the context...
Assume an investment opportunity which provides the following cash flows: 15,000$ in one year, 9,000$ in...
Assume an investment opportunity which provides the following cash flows: 15,000$ in one year, 9,000$ in two years, 8,750$ in three years, 12,000$ in four years and 5,000$ in five years. If the relevant required rate of return for this investment is 8%, what is the investment’s value in year three?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT