Question
In: Finance
7.Your company is launching a product that will generate cash flows for 20 years. The first...
7.Your company is launching a product that will generate cash flows for 20 years. The first cash flow of $10,000 will occur one year from today (at t=1) and will grow at 5% in each subsequent year for the first ten years at which point the cash flow will plateau and remain constant for the reminder of the product life (so the cash flow grows 9 times, from t=2 to t=10, after which the cash flows remain constant at the amount that was paid at t=10). What is the present value of the cash flows if the discount rate is 7%?
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Belkro Inc. is considering launching a new product that will generate an additional Operating Cash Flow...
Belkro Inc. is considering launching a new product that will
generate an additional Operating Cash Flow to the firm of $120,000
per year for 5 years. The project requires an initial
capital investment in new equipment of $500,000. The equipment will
be depreciated to zero over the life of the project. The project
will require an initial increase in inventory of $75,000. Inventory
will return to its current level at the end of the project. The
company’s tax rate is...
A firm considers launching a new product in the market that is expected to generate the...
A firm considers launching a new product in the market that is
expected to generate the following revenues:
Year
Revenues
1
£40,000
2
£30,000
3
£20,000
4
£10,000
Thereafter
0
Expenses are expected to be 40% of revenues, and working capital
required in each year is expected to be 20% of revenues in the
following year. The product requires an immediate investment of
£45,000 in plant and equipment
ii. If the plant and equipment are depreciated over 4 years to...
An investment is expected to generate annual cash flows forever. The first annual cash flow is...
An investment is expected to generate annual cash flows forever.
The first annual cash flow is expected in 1 year and all subsequent
annual cash flows are expected to grow at a constant rate annually.
We know that the cash flow expected in 3 years from today is
expected to be $9,000 and the cash flow expected in 7 years from
today is expected to be $10,000. What is the cash flow expected to
be in 5 years from today?
An investment is expected to generate annual cash flows forever. The first annual cash flow is...
An investment is expected to generate annual cash flows forever.
The first annual cash flow is expected in 1 year and all subsequent
annual cash flows are expected to grow at a constant rate annually.
We know that the cash flow expected in 2 year(s) from today is
expected to be 1,860 dollars and the cash flow expected in 8 years
from today is expected to be 3,140 dollars. What is the cash flow
expected to be in 5 years...
1. An asset is projected to generate annual cash flows of $7,000 for the first 10...
1.
An asset is projected to generate annual cash flows of $7,000
for the first 10 years starting one year from today followed by a
final cash flow of $11,000 in the 11th year. If the discount rate
is 8.3%, how much is this asset worth today? Round to the nearest
cent.
2.
Starting at the end of this year, you plan to make annual
deposits of $7,000 for the next 10 years followed by a final
deposit of $10,000...
You are looking at investing in a new investment product which will generate cash flows of...
You are looking at investing in a new investment product which
will generate cash flows of $2,000 next year and the cash flows
will grow by 5% per year. You will receive payments for the
following 6 years (a total of 6 payments including the first
payment of $2,000 next year). If the appropriate discount rate to
evaluate the product is 4%, how much is the investment product
worth to you today?
A project will generate annual cash flows of $237,600 for each of the next three years,...
A project will generate annual cash flows of $237,600 for each
of the next three years, and a cash flow of $274,800 during the
fourth year. The initial cost of the project is $746,600. What is
the internal rate of return of this project?
Multiple Choice
10.60%
11.26%
9.93%
11.92%
12.91%
A project will generate annual cash flows of $237,600 for each of the next three years,...
A project will generate annual cash flows of $237,600 for each
of the next three years, and a cash flow of $274,800 during the
fourth year. The initial cost of the project is $765,600. What is
the internal rate of return of this project?
A project will generate annual cash flows of $237,600 for each of the next three years,...
A project will generate annual cash flows of $237,600 for each
of the next three years, and a cash flow of $274,800 during the
fourth year. The initial cost of the project is $749,600. What is
the internal rate of return of this project?
We have property that is projected to generate cash flows of $100,000 over this first year...
We have property that is projected to generate cash flows
of $100,000 over this first year of operations. Our projected
growth rate in those flows is constant at 5% over the 5 year
holding period. What is the NPV of those cash flows discounted at
12%? Initial outlay is $300,000.
Net present value of investment
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