Question
In: Finance
Determine cash flows, r, and n You are considering an investment that has a payoff of...
Determine cash flows, r, and n
| You are considering an investment that has a payoff of $4,707.79 in 2 years. If the interest rate is 11.68%, and interest is compounded annually, then what is this investment worth to you today? | |||||||||||||
Solutions
Expert Solution
Investment will pay a Cash flow in 2 years(Cashflow) = $4707.79
Interest rate(r) = 11.68%
No of years(n) = 2 years
Calculating the Present value of Cashflow today:-
Present Value = Cashflow in year2/(1+r)^n
Present Value= $4707.79/(1+0.1168)^2
Present Value= $4707.79/1.24724224
Present Value = $3774.56
So, Investment worth today is $3774.56
jeff jeffy answered 2 years agoRelated Solutions
A company has 2 investment opportunities with the following cash flows: &n
A company has 2 investment opportunities with the following cash
flows:
Year 1
Year 2
Year 3
Investment
A
$1,500
$1,250
$1,800
Investment
B
$1,500
$1,500
$1,500
If a company can earn 5% in other investments, what is the
present value of investments A and B?
Investment A = $4,084.50 Investment B = $4,117.20
Investment A = $4,084.50 Investment B = $4,084.50
Investment A = $4,117.20 Investment B = $4,084.50
Investment A = $4,275 Investment B =...
You are considering an investment which has the following cash flows. If you require a 5 year...
You are considering an investment which has the following cash
flows. If you require a
5 year payback,
should you take the investment?
Year 0 1 2 3 4 5 6
Cash
flow
-$30,000 $10,000 $5,000 $5,000 $7,500 $10,000 $20,000
please show steps in excel
You are considering an investment that has a payoff of $881.99 in 32 years. If the interest rate is 3.63%
You are considering an investment that has a payoff of $881.99
in 32 years. If the interest rate is 3.63%,and interest is compounded annually, then what is this
investment worth to you today?Answer =Cash Flow =r =n =
Braun Industries is considering an investment project that has the following cash flows: &nbs
Braun Industries is considering an investment project that has
the following cash flows:
Project
Year Cash
Flows
0 -$641
1 $421
2 $407
3 $490
The company’s WACC is 10.5 percent. What is the
project’s payback, internal rate of return (IRR), and net present
value (NPV)?
You are considering an investment with the following cash flows. Your required return is 8%, you...
You are considering an investment with the following cash flows.
Your required return is 8%, you require a payback of 3 years and a
discounted payback of 4 years. If your objective is to maximize
your wealth, should you take this investment?
Year 0 1 2 3 4 5
Cash Flow –$50,000 $20,000 $20,000 $20,000 $20,000 –$50,000
Yes, because the payback is 2.5 years.
Yes, because the discounted payback is less than 4 years.
Yes, because both the payback and...
- Assume you are considering an investment costing $10,000, for which the future cash flows from...
- Assume you are considering an investment costing $10,000, for
which the future cash flows from owning the security depend on the
state of the economy as estimated in this table. In any given year
the, the investment could produce any one of three possible cash
flows, depending on the particular state of the economy.
Given this information calculate:
Expected Cash Flow
Expected rate of return
State of the economy
Probability of the states
Cash flow from the investment
%...
You are considering building a shopping mall. The initial investment is $1.33 million. The cash flows...
You are considering building a shopping mall. The initial
investment is $1.33 million. The cash flows are $480,000 for year
1, $250,000 for year 2. $160,000 for year 3, and $170,000 for year
4. What are the net present value (NPV), and profitability index
(PI) of the project if the cost of capital is 7%? Compute the
internal rate of return (IRR) for the project. What is the NPV of
the shopping mall?
An investment that Kevin is considering offers the following cash flows. Year 1 Initial investment of...
An investment that Kevin is considering offers the following
cash flows.
Year 1 Initial investment of $10,000
Year 2 Inflow of $2,000
Year 3 Inflow of $1,500
Year 4 Additional investment of
$5,000
Year 5 Inflow of $1,200
Year 6 Inflow of $2,200
Year 7 Inflow of 1,500
Year 8 Inflow of $1,000
Year 9 Inflow of $1,200
Year 10 Sale proceeds of $17,000
5. What is the internal rate of return (IRR)
that this investment offers if all cash...
You are given an investment to analyze. The cash flows from this investment are End of...
You are given an investment to analyze. The cash flows from this
investment are End of year $1,889 $4,423 $631 $2,091 $1,431 What is
the future value of this investment at the end of year five if
13.93 percent per year is the appropriate interest (discount)
rate?
You are given an investment to analyze. The cash flows from this investment are End of...
You are given an investment to analyze. The cash flows from this
investment are
End of year
1. $23,820
2. $2,250
3. $5,750
4. $13,840
5. $3,240
What is the present value of this investment if 5 percent per
year is the appropriate discount rate?
Round the answer to two decimal places.
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Is there any specific issues/problems/challenges that Air Asia faced in Thailand, Vietnam, India, Indonesia and Philippines?...
- An asset in the five-years MACRS property class costs $150,000 and has a zero estimated salvage...
- Define the behavioral outcomes of consumption ?
- How do leadership theory/theories influenced the behaviour of people and operations in an organisation?
- Describe three ways in which the composition of fuel changes while the reactor is in operation,...
- Required: 1-2 paragraphs Summarize the evolution of civil liberties in the United States.
- explain how the various categories of federal government spending (such as spending on entitlements, or infrastructure...
ADVERTISEMENT