Question

In: Finance

Assume that you have the following possible cash flows: Years 1 and 2 CFs = $300;...

Assume that you have the following possible cash flows:

Years 1 and 2 CFs = $300;

Year 3 CF = $100;

Years 4 and 5 CFs = $200.

What is the value of the cash flows at year 4 if the required discount rate is 5%?

Solutions

Expert Solution

Solution :

The value of the single cash flow at year 4 = $ 164.5405

= $ 164.54 ( when rounded off to two decimal places )

The total value of cash flows at year 4 = $ 285.7143 + $ 272.1088 + $ 86.3838 + $ 164.5405

= $ 808.7474

= $ 808.75 ( when rounded off to two decimal places )

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.


Related Solutions

You have 6 years of after-tax cash flows in the table. Assume the following:
You have 6 years of after-tax cash flows in the table. Assume the following:• Initial Investment at Time zero =$1,800• WACC=9.75%Compute the NPV of the investment. Round to the second decimal place and DO NOT include the $ special character. Hence, 45.678 would be properly written as 45.68 in this problem.
You have 3 projects with the following cash​ flows: Year    0       1   2     ...
You have 3 projects with the following cash​ flows: Year    0       1   2      3         4 Project 1   -$149   $19   $42   $61      $79 Project 2   -827      0   0   7,002   -6,508 Project 3   18          39   62   81      -247 a. For which of these projects is the IRR rule​ reliable?_______. b. Estimate the IRR for each project​ (to the nearest 1 %​).________. c. What is the NPV of each project if the cost of capital is 5...
You invest in Louis Lane Company an expect the following stream of CFs:  $300 in...
You invest in Louis Lane Company an expect the following stream of CFs:  $300 in year 1  $475 in year 2  $250 in year 3 Starting year 4 you have some good reasons to expect your CFs to constantly grow at 5% forever and interest rate is 15% 1. What is the terminal value? 1. What is the value of this investment? Suppose that the company has 1000 outstanding shares. 2. What is the intrinsic value? You...
Assume that today is 1/1/18. Assume that you expect the following cash flows of EL, INC.
Assume that today is 1/1/18. Assume that you expect the following cash flows of EL, INC.                                                                        CASH FLOWS1/1/18              1/1/19          1/1/20                 1/1/21              1/1/22                        $4                  $5                    $0                  $8      Assume that you will buy one share today (1/1/18) and sell your one share 3 years from today (1/1/21). How much do you expect to sell your one share for on 1/1/21? Assume that these are all of the cash flows that EL will produce. Also assume that a fair rate of return...
Question 1: For the following assume you have a (2 years) time series data with the...
Question 1: For the following assume you have a (2 years) time series data with the daily price of one cryptocurrency(or multiple cryptos) for example Bitcoin. Also, you have other variables such as S&P500, VIX, transaction volume, EMWA, and also one (or more if you like) attention factors that could be searches on "bitcoin" on google, number of searches on wikipedia etc. You can add more or remove some of the variables that are mentioned if you think that some...
Question 1: For the following assume you have a (2 years) time series data with the...
Question 1: For the following assume you have a (2 years) time series data with the daily price of one cryptocurrency(or multiple cryptos) for example Bitcoin. Also, you have other variables such as S&P500, VIX, transaction volume, EMWA, and also one (or more if you like) attention factors that could be searches on "bitcoin" on google, number of searches on wikipedia etc. You can add more or remove some of the variables that are mentioned if you think that some...
Assume all cash flows occur at the end of the period 1. You have a rich...
Assume all cash flows occur at the end of the period 1. You have a rich Aunt Ernestine, who recently passed on. In her will, she stipulated you would receive $1,000 a year through age 25; then you will receive $2,500 a year through age 30, then you are to get $5,000 a year through 40 years of age, at which time your payments will cease. You just had your twentieth birthday today (hint: your first cash flow occurs one...
Waste Industries is evaluating a $55,500 project with the following cash flows. Years Cash Flows 1...
Waste Industries is evaluating a $55,500 project with the following cash flows. Years Cash Flows 1 $ 9,120 2 20,200 3 26,600 4 16,300 5 26,300 The coefficient of variation for the project is 0.475. Coefficient of Variation Discount Rate 0 − 0.25 7 % 0.26 − 0.50 9 % 0.51 − 0.75 13 % 0.76 − 1.00 16 % 1.01 − 1.25 19 % Use Appendix B for an approximate answer but calculate your final answer using the formula...
Waste Industries is evaluating a $56,900 project with the following cash flows. Years Cash Flows 1...
Waste Industries is evaluating a $56,900 project with the following cash flows. Years Cash Flows 1 $ 9,710 2 19,200 3 26,500 4 19,800 5 27,300 The coefficient of variation for the project is 0.443. Coefficient of Variation Discount Rate 0 − 0.25 7 % 0.26 − 0.50 9 % 0.51 − 0.75 13 % 0.76 − 1.00 16 % 1.01 − 1.25 19 % Use Appendix B for an approximate answer but calculate your final answer using the formula...
2.Find the future value in 7 years of the following cash flows: 2,000 in 2 years...
2.Find the future value in 7 years of the following cash flows: 2,000 in 2 years and 7,000 in 4 years. The interest rate is 7.6% p.a. compounded monthly for the first 5 years and 5.8% p.a. compounded half-yearly thereafter. (Correct your answer to the nearest cent without any unit (No need to put "$"). Do not use "," in your answer. e.g. 123456.78)) 3.Your uncle offers to sell you his vintage Rolls Royce. He suggests a payment plan where...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT