Find the present value of an annuity

Assignment Help Financial Management
Reference no: EM131185244

1. Find the Present Value of an annuity thay pays $1000 per year for 12 years at 10%? How would your answer change if the payments are made at the beginning of the year? ( Use Tables provided or the Formula to solve the problem)

2. What is the PV of a perpetuity of $100 per year if the appropriate discount rate is 7%? If the interest rates in general were doubled and the appropriate discount rate rose to 14%, what would happen to the present value of the perpetuity?

3. (4-14) Find the present values of the following cash flow streams interest rate 8% eg 100/1.08^ + 400/1.08^2 +400/1.08^3 etc Year Cash Stream A Cash Stream B 1 $ 100 $ 300 2 400 400 3 400 400 4 400 400 5 300 100

4. What is the value of each cash flow stream at a 0% interest rate? (Hint. Total the Cash flow amount)

Must show ALL work

Reference no: EM131185244

Questions Cloud

Cash flow to stoclkholders and cash flow to creditors : Volbeat Corp. shows the following information on its 2015 income statement: sales = $275,000; costs = $188,000; other expenses = $7,900; depreciation expense = $15,200; interest expense = $13,600; taxes = $17,605; dividends = $10,500. In addition, yo..
Price does dividend-discount model predict colgate stock : Colgate-Palmolive company has just paid an annual dividend of $0.97. Analysts are predicting a 10.6% per year growth rate in earnings over the next five years. after that, colagtes earnings are expected to grow at the current industry average of 5.3%..
Difference between current liability and long-term liability : What is the difference between a current liability and a long-term liability? How are liabilities taken into account when analyzing an organization's current financial position? Is it better to have more money in liabilities or equity?
Present value with different discount rates : Present Value with Different Discount Rates Compute the present value of $1,000 paid in three years using the following discount rates: 6 percent in the first year, 7 percent in the second year, and 8 percent in the third year.
Find the present value of an annuity : Find the Present Value of an annuity thay pays $1000 per year for 12 years at 10%? How would your answer change if the payments are made at the beginning of the year? What is the PV of a perpetuity of $100 per year if the appropriate discount rate is..
Calculate the gross profit margin-operating profit margin : Profitability Ratios Maggie’s Skunk Removal Corp.’s 2015 income statement listed net sales of $12.5 million, gross profit of $6.9 million, EBIT of $5.6 million, net income avail- able to common stockholders of $3.2 million, and common stock dividends..
What is per-share value of van-buren to harrison corporation : Harrison corporation is intersted in acquiring Van Buren Corporation. Assume that the risk-free rate of interest is 5%, and the market risk premium is 6%. What is the per-share value of Van-Buren to Harrison Corporation?
What is approporate discount rate for valuing acquisition : Martin Technologies Inc., a large electronics company, is evaluating the possible acquisition of Columbia Electronics, a regional electronics company. Martin's analysts roect the following post-merger data for Columbia (in millions of dollars); 2015 ..
Considered to calculate the initial outlay and why : Calculate the initial outlay required to fund the following project: The firm is considering the purchase of equipment that has an invoice price of $450,000. The cost of shipping and installation is $50,000. Explain what is and is not considered to c..

Reviews

Write a Review

 

Financial Management Questions & Answers

  Compute cost of preferred stock-make tax adjustment for firm

Medco Corporation can sell preferred stock for $90 with an estimated flotation cost of $2. It is anticipated the preferred stock will pay $8 per share in dividends. compute the cost of preferred stock for Medco Corp. Do we need to make a tax adjustme..

  Firm has no debt outstanding and a total market value

If a firm has no debt outstanding and a total market value of $125,000. Earnings before interest and taxes are projected to be $10,400 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 20% higher. Calcu..

  Complete five year forecasted pro forma financial statement

Complete the five-year forecasted pro-forma financial statement for the firm. - use the dividend discount model to compute the value of one share of the firm.

  Annual deposits into a retirement account

You make $8,700 annual deposits into a retirement account that pays 10.1 percent interest compounded monthly. Required: How large will your account balance be in 33 years?

  What is the maximum price you should pay for stock

The QuickFix Company just paid a dividend of $3.00 and analysts expect the dividend to grow at its compound average growth rate of 10.72% forever. You plan to purchase the stock then hold it for 10 years. Your expected rate of return is 12%, and the ..

  About the exchange rates

Exchange rates. The exchange rate for the Australian dollar is currently a $1.40. This exchange rate is expected to rise by 10 percent over the next year. Is the Australian dollar expected to get stronger or weaker? What do you think about the relati..

  Common stock valuation

Abercrombie & Fitch's common stock pays a dividend of $0.70. It is currently selling for $34.14. If the firm's investors require a return of 10 percent on their investment from buying Abercrombie & Fitch stock, what growth would Abercrombie & Fitch h..

  Forward price and the initial value of the forward contract

A stock is expected to pay a dividend of $1.50 per share in 3 months and a dividend of $1 per share in 5 months. The Stock Price is $70, and the risk free rate is 5% per annum with the continuous compounding for all maturities. What are the forward p..

  Calculate the price of this bond

Suppose you buy a TIPS bond with a 5% coupon rate, 18 months to maturity, pays semiannually, and a YTM of 3.3%. The CPI is currently 275.2. It will increase to 288 in 6 months, to 291 in 12 months, and to 294 in 18 months. Calculate the price of this..

  Find the after-tax cash flow for each year

A special handling device for the manufacture of food is placed in service. It costs $20,000 and has a salvage value of $2,000 after a useful life of 5 years. The device generates a savings of $14,000 per year. Corporate income taxes are 40 percent. ..

  Find internal rate of return for series of future cash flows

Find the internal rate of return (IRR) for the following series of future cash flows. The initial outlay is $509,10

  Which security has the greatest total risk

which security has the greatest total risk? Explain which security has the least systematic risk? Explain which securities' volatility are greater than that of the market explain. which security will require the greatest return ? Explain

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd