Plan to analyze the value of a potential investment

Assignment Help Financial Accounting
Reference no: EM131032802

Plan to analyze the value of a potential investment by calculating the sum of the present values of its expected cash flows. Which of the following would lower the calculated value of the investment?

a. The cash flows are in the form of a deferred annuity, and they total to $100,000. You learn that the annuity lasts for only 5 rather than 10 years, hence that each payment is for $20,000 rather than for $10,000.

b. The discount rate increases.

c. The riskiness of the investment's cash flows decreases.

d. The total amount of cash flows remains the same, but more of the cash flows are received in the earlier years and less are received in the later years.

e. The discount rate decreases.

Reference no: EM131032802

Questions Cloud

Treasury bill maturing : Suppose you pay $9,800 for a Treasury bill maturing in two months. What is the annual percentage rate of return for this investment?
Perform the round-robin dispatch algorithm : Perform the Round-Robin dispatch algorithm, with time quantum equal to 300 milliseconds, on the job queue and calculate Average turn-around-time.
The return on equity for similar stocks : A stock has just paid a dividend and will pay a dividend of $3.00 in a year. The dividend will stay constant for the rest of time. The return on equity for similar stocks is 14%. What is P0?
The default risk premium for crockett''s bonds : Crockett Corporation's 5-year bonds yield 6.35%, and 5-year T-bonds yield 4.75%. The real risk-free rate is r* = 3.60%, the default risk premium for Crockett's bonds is DRP = 1.00% versus zero for T-bonds, the liquidity premium on Crockett's bonds is..
Plan to analyze the value of a potential investment : a. The cash flows are in the form of a deferred annuity, and they total to $100,000. You learn that the annuity lasts for only 5 rather than 10 years, hence that each payment is for $20,000 rather than for $10,000.
Determine what pressure will be required : Estimate (guess) how long step 3 will take and what size will be needed for the piston-cylinder to provide the required air changes and temperature.
What strategies would you recommend for a person : How do you think that leadership would be different for a person who leads only persons between 18 and 35 and a person whose followers are mainly over the age of 40? What strategies would you recommend for a person who becomes the leader of a mixe..
Write a research paper about apple history : Write a research paper about apple history.
Write a words essay question-chinese religion : Write a 600 words essay question-Chinese religion. We could say that Confucianism, Daoism, and Buddhism, all see fundamental problems with the state of the world.

Reviews

Write a Review

Financial Accounting Questions & Answers

  How purchase of pre-owned trucks will affect balance sheet

Explain how the purchase of the pre-owned trucks will affect the balance sheet, include the entry to record the transaction, and explain why the amount must be at the price paid for the trucks.

  Prepare a perpetual inventory record using fifo inventory

Prepare a perpetual inventory record, using the FIFO inventory costing method, and determine the company's cost of goods sold, ending merchandise inventory, and gross profit.

  Cash vs accrual accounting

First of all, let me just say that anyone can copy from the text. I'm not going to ask you to parrot back the definitions of cash and accrual accounting. I would like for you to describe the two methods in your own words first. Then, answer the..

  What proceeds does wells fargo receive from the investors

Wells Fargo sells $200,000 of bonds to private investors. The bonds are due in five years, have an 8% coupon rate, and interest is paid semi-annually. The bonds were sold to yield 6%. What proceeds does Wells Fargo receive from the investors?

  Compute blacksmiths earnings per share for 2012

Compute Blacksmith's earnings per share for 2012. Start with income from continuing operations. All income and loss amounts are net of income tax.

  Show entries in general journal form

The budget was recorded. It is given for Estimated Revenues for the year in the amount of $325,000, and for Appropriations in the amount of $325,000. A temporary loan of $325,000 was gets from the General Fund.

  What is the translation amount

what is the translation amount to be shown on American Golf's equity account for the year if the peso is the functional currency? How would your answer change if the dollar were the functional currency?

  The net income reported on income statement of the present

the net income reported on income statement of the present year was 92000.depreciation recorded on store equipment for

  Prepare any adjusting entries you feel are necessary

Prepare any adjusting entries you feel are necessary in a separate tab sheet,  in a proper adjusting journal entry format, including explanations.

  Martin transfers real estate with an adjusted basis

Martin transfers real estate with an adjusted basis of $260,000 and fair market value of $350,000 to a newly formed corporation in exchange for 100% of the stock. The corporation assumes the liability on the transferred real estate in the amount of $..

  Problemwhile reviewing the march 31 2012 balance sheet of

problemwhile reviewing the march 31 2012 balance sheet of business solutions santana rey notes that the business has

  What was the average market price per share

What was the average market price per share at which common stock was issued, and what was the average market price per share at which preferred stock was issued and what is the total value of the Paid in Capital portion of stockholders equity?

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