What is the present value of the stream

Assignment Help Financial Management
Reference no: EM131300142

Consider the following uneven cash flow stream:

   Year   Cash Flow

   0   $0 

   1   $250

   2   $400

   3   $500

   4   $600 

   5   $600 

a. What is the present (Year 0) value if the opportunity cost (discount) rate is 10 percent?

b. Add an outflow (or cost) of $1,000 at Year 0. What is the present value (or net present value) of the stream?

Reference no: EM131300142

Questions Cloud

Impact on debt rating and stock price : Imagine you have been hired as a consultant by Zachary Meyerowitz, chief investment officer for Bright Side investment fund. Mr. Meyerowitz has asked you to estimate the change needed to adjust Exxon Mobil’s reserves valuation in consideration of low..
Use standard business memo heading : Imagine you have been hired as a consultant by Zachary Meyerowitz, chief investment officer for Bright Side investment fund. Mr. Meyerowitz has asked you to estimate the change needed to adjust Exxon Mobil’s reserves valuation in consideration of low..
Expects to have basic earning power ratio : Commonwealth Construction (CC) needs $1 million of assets to get started, and it expects to have a basic earning power ratio of 15%. CC will own no securities, so all of its income will be operating income. what is the difference between CC's expecte..
What are the services they offer and how much does it cost : Look at 2 pay day advance places: Moneytree and USA Checks Cashed & Payday Advance What are the services they offer and how much does it cost? If you wanted a $1000 advance on your next pay check, how much would that cost you if you paid it back with..
What is the present value of the stream : What is the present (Year 0) value if the opportunity cost (discount) rate is 10 percent? Add an outflow (or cost) of $1,000 at Year 0. What is the present value (or net present value) of the stream?
Weighted averaging may be done in the context : Advising NT Inc., you point out that weighted averaging may be done in the context of...
What is the yield to maturity : A firm issues an annual bond today with a $1,000 face value, an 8% annual coupon interest rate, and 25-year maturity. An investor purchases the bond for $1,000. What is the yield to maturity (YTM)? Suppose the investor bought the bond described in th..
Great lakes automotive is considering producing : Great Lakes Automotive (GLA) is considering producing, in-house, a gear assembly that it currently purchases from Delta Supply for $6 per unit. How large can the cost of setting up the production process before the in-house gear assembly cease to be ..
Sales growth for the just concluded calendar year : NT Inc has registered an impressive 35% sales growth for the just concluded calendar year 2014 and expects to repeat this for 2015. This means..... (S=Sales)

Reviews

Write a Review

Financial Management Questions & Answers

  One of the most common business tools throughout

swot analysis and strategic scorecardone of the most common business tools during organizational assessment is the

  True of the rule of seventy two

Which of the following statements is true of the rule of 72?

  Collect and evaluate the data about stock performance

Collect and evaluate the data about stock performance of PepsiCo for the last one year. Compare the results that you received against the industry or main competitor (Coca-cola Company).

  First annual retirement payment

Mel plans to save 10,200 dollars per year in his retirement account for 6 years. His first savings contribution to his account is expected in 1 year. Mel expects to earn 7.79 percent per year in his account. He plans to retire in 6 years. In retireme..

  Find your profit or loss on the expiration date of option

Currently, one share of ABC stock is valued at 92. You are given the following prices of European options on one share of this stock: You buy one 95-strike call option. On the expiration date of the option, ABC stock has a price of 101 per share. Fin..

  Assuming no market imperfections or tax effects exist

ABC currently has 650000 shares of stock outstanding that sell for $75 per share. Assuming no market imperfections or tax effects exist, what will the share peice and the total number of share after each of the following?

  John jones currently holds tax-exempt bonds

John Jones currently holds tax-exempt bonds that pay 7% interest and is in the 32% tax bracket. He is considering buying taxable bonds. With all else the same, what interest rate on the taxable bonds will he need to get the same after-tax return as t..

  Calculate stars weighted average cost of capital for each

Star Products Company is a growing manufacturer of automobile accessories whose stock is actively traded on the over-the-counter (OTC) market. During 2012, the Dallas-based company experienced sharp increases in both earnings and sales. Calculate Sta..

  What is the total rate of return on the bond

Find the bond's price today and four months from now after the next coupon is paid. What is the total rate of return on the bond?

  Performing ratio analysis-journal entries for transactions

Preparing a Complete Set of Financial Statements, and Performing Ratio Analysis LO4-1, 4-2, 4-3, 4-4 [The following information applies to the questions displayed below.] Brothers Mike and Tim Hargen began operations of their tool and die shop (H & H..

  Common forms of business organizations

1. What are the three most common forms of business organizations in the United States? 2. What are the three basic types of agency relationships?

  What EAR are customers actually paying

A check---cashing store is in the business of making personal loan to walk---up customers. The store makes only one---week loans at 7.5 percent interest per week. What APR must the store report to its customer? What EAR are customers actually paying?

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