Calculate the value of the stream of cash flows below in Year 4. t=0--->CF0 = $450...

Calculate the value of the stream of cash flows below in Year 4. t=0--->CF0 = $450 t=1--->CF1 = $550 t=2--->CF2 = $650 t=3--->CF3 = $750 t=4--->CF4 = $850 t=5--->CF5 = $950 t=6--->CF6 = $1050 The relevant rate is 8%.

Solutions

Expert Solution

Value of casg flow at the end of fourth year =CF *(1+ interest rate) ^ time till 4 th year

Value of CF0 at the end of 4th year =450*(1+8%)^4

=450*1.36048896

=612.22

Value of CF1 at the end of 4th year =550*(1+8%)^3

=550*1.259712

=692.84

Vakue of CF 2 at the end of 4th year =650*(1+8%)^2

650*1.1664

=750.16

Value of CF 3 at the end of 4th year = 750*(1+8%)^1

=750*1.08

=787.5

Value of CF 4 at the end of 4 th year =850*(1+8%)^0

=850*1=850

Value of CF5 at the end of 4 th year =950*(1+8%)^-1

950/1.08=879. 63

Value of CF6 at the end of 4th year =1050*(1+8%)^-2

=1050/1.1664

=900.21

Hence the value of all cash flows at the end of 4 th year

=692.84+750.16+787.5+850+879.63+900.21

=4860.34

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

Calculate the IRR(s) for a 10-year project with the following cash flows: CF0 = -30, CF1...

Calculate the IRR(s) for a 10-year project with the following cash flows: CF0 = -30, CF1 = 10 = CF2 = CF3 = CF4 = CF5 = CF6 = CF7 = CF8 = CF9, and CF10 = -65. In Excel, plot the NPV against r (= discount rate), using r = 0%, 2%, 4%, 6%, 8%, 10%, 12%, 14%, 16%, 18%, 20%, 22%, 24%, 26%, 28%, and so on until you find all IRRs on the horizontal axis. Approximately, what...

Calculate the net present value at year 0 for the following cash flows and interest rates...

Calculate the net present value at year 0 for the following cash flows and interest rates compounded semi-annually (rounded $ to two places after the decimal). The year 0 cash flow is $373, the year 1 cash flow is $200, and the year 2 cash flow is $-147. The interest rate for the first period (year 0 to 1) is 3% and the interest rate for the second period (year 1 to 2) is 4.5%.

Calculate NPV for the following stream of cash flows: Year 1 is an outflow of $200...

Calculate NPV for the following stream of cash flows: Year 1 is an outflow of $200 for research; Years 2, 3 and 4 have a cash inflow each year of $100. The appropriate discount rate for valuation is 10%. NPV is

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....

Calculate the present value (PV ) of an annuity stream of 5 annual cash flows of $1,200, with the first cash flow received in one year

Calculate the present value (PV ) of an annuity stream of 5 annual cash flows of $1,200, with the first cash flow received in one year, assuming a discount rate of 10%.

What is the Net Present Value of the following cash flow stream? Year Cash Flow 0...

What is the Net Present Value of the following cash flow stream? Year Cash Flow 0 -$489 1 $363 2 $192 3 $161 4 $256 Assume an interest rate of 13% Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. If your answer is negative, enter your answer as a negative number rounded off to two decimal points.

a. Find present value of the following cash flows at 3% rate: CF0 = -1000; CF1...

a. Find present value of the following cash flows at 3% rate: CF0 = -1000; CF1 = 300; CF2 = 560; CF3 = -90; CF4 = 250. b. What is the future value of these cash flows?

1. Find the present value as of year 0 of the following cash-flow stream if investments...

1. Find the present value as of year 0 of the following cash-flow stream if investments of similar risk are yielding 8% Year Cash Flow 0 through 14 $8,000 per year in each of those years 2. Find the present value as of year 0 of the following cashflow stream if investments of similar risk are yielding 8.25% Year Cash Flow 6 through 28 $8,000 per year in each of those years

Calculate the NPV given the following cash flows YEAR CASH FLOWS 0 -60,000 1 25,000 2...

Calculate the NPV given the following cash flows YEAR CASH FLOWS 0 -60,000 1 25,000 2 25,000 3 15,000 4 15,000 5 10,000 6 10,000 if the appropriate required rate of return is 8 percent. Should the project be accepted? What is the project's NPV?

What is the present value of a stream of cash flows expected to grow at a...

What is the present value of a stream of cash flows expected to grow at a 10 percent rate per year for 5 years and then remain constant thereafter until the final payment in 30 years. The payment at the end of the first year is $1,000 and the discount rate is 5.00 percent.

Subjects