What is the present value of this cash flow pattern

Assignment Help Financial Management
Reference no: EM131056159

You have been offered the opportunity to invest in a project that will pay $2,462 per year at the end of years one through three and $10,866 per year at the end of years four and five. If the appropriate discount rate is 7.1 percent per year, what is the present value of this cash flow pattern?

Reference no: EM131056159

Questions Cloud

Using single-period binomial model : Find out the price of a put option based on a stock currently priced at $40, and will be either $50 or $32 in one year. This put option has an expiration date in one year with strike price of $38. The risk free rate is 6%. (Hint: using single-period ..
Futures contract buyer versus a buyer of call option : Compare and contrast the commitments taken on by a futures contract seller versus a buyer of a put option. Compare and contrast the commitments taken on by a futures contract buyer versus a buyer of a call option.
The company ranks projects by their payback periods : Project Ell requires an initial investment of $50,000 and the produces annual cash flows of $30,000, $25,000, and $15,000. Project Ess requires an initial investment of $60,000 and then produces annual cash flows of $25,000 per year for the next ten ..
Why were conversion factors developed : What are conversion factors? Why were conversion factors developed? How do they impact on which bond is cheapest to deliver? Under what conditions would there be no cheapest to deliver? Explain in detail.
What is the present value of this cash flow pattern : You have been offered the opportunity to invest in a project that will pay $2,462 per year at the end of years one through three and $10,866 per year at the end of years four and five. If the appropriate discount rate is 7.1 percent per year, what is..
What are implications for cash flow and shareholder wealth : Companies often try to keep accounting earnings growing at a relatively steady pace in an effort to avoid large swings in earnings from period to period. They also try to manage earnings targets. What are two tactics that a financial manager can use ..
How many years will it take the firm to pay off this debt : Berkley Trucking recently purchased a new truck costing $147,800. The firm financed this purchase at 7.6 percent interest with monthly payments of $2,100. How many years will it take the firm to pay off this debt?
What is the bonds nominal yield to call : Walker Industries has a bond outstanding with 12 years to maturity, a 9% coupon paid annually, and a $1,000 par value. The bond has a 7% nominal yield to maturity, but it can be called in 4 years at a price of $1,025. What is the bond’s nominal yield..
Compare the cost to the bank lending rate : James wants to buy a flat screen television for his new apartment. He has saved $700, but still needs $500 more. The bank where he has a checking and savings account will loan him $500 at 12% annual interest using a 90-day promissory note. He wondere..

Reviews

Write a Review

Financial Management Questions & Answers

  Calculate the tax on the sale of each asset

Capital gains taxes Perkins Manufacturing is considering the sale of two nondepreciable assets, X and Y. Asset X was purchased for $2,000 and will be sold today for $2,250. Asset Y was purchased for $30,000 and will be sold today for $35,000. The fir..

  What are your put options worth-what is your net profit

Suppose you purchase five put contracts on Testaburger Co. The strike price is $54, and the premium is $3. If, at expiration, the stock is selling for $47 per share, what are your put options worth? What is your net profit?

  Worst case scenario determines the maximum loss

The worst case scenario determines the maximum loss, in current dollars, that a firm could possibly incur from a given project. Scenario analysis defines the entire range of results that could be realized from a proposed investment project. Scenario ..

  What is the smallest expected loss for your portfolio

Your portfolio allocates equal amounts to three stocks. All three stocks have the same mean annual return of 11 percent. Annual return standard deviations for these three stocks are 26 percent, 36 percent, and 46 percent. The return correlations amon..

  Underwritten agreement and best efforts arrangement

Last year Nowitzki inc. entered into an agreement with Duncan partners, an investment bank. At the time of issue, Duncan Partners has agreed to purchase all offered shares from Nowitzki and then try to sell all shares in the primary market.

  Determine ratio of mortgage payment to gross monthly income

Please calculate your loan application with 28/36% rule and show the clear and step-by-step calculation. Part A : Calculate the 28% rule [1] Determine the total monthly payment for principle and interest. Determine the ratio of mortgage payment to gr..

  Explain participating budgeting and slow budgeting

Explain participating budgeting and slow budgeting.

  Total value of the assets of the accounting entity

If the total value of the assets of the accounting entity is $4,350,000 and the total liabilities of the accounting entity are $1,235,000 the stockholders' equity in the accounting entity is?

  What risks do companies face doing business internationally

What risks do companies face doing business internationally that they do not face doing business domestically? Do you think now is a good time to invest internationally?  If you were to invest internationally, what countries or industries do you thin..

  What is the price per share of the stock

Ward Corp. is expected to have an EBIT of $2,400,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $175,000, $105,000, and $125,000, respectively. All are expected to grow at 18 percent per year..

  The return on equity for similar stocks

A stock has just paid a dividend and has declared an annual dividend of $2.00 to be paid one year from today. The dividend is expected to grow at a 5% annual rate. The return on equity for similar stocks is 12%. What is P0?

  Statements about US corporations

Which of the following statements about u.s. corporations is correct?

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