What is the present value of this investment

Assignment Help Financial Management
Reference no: EM13987747

You win a scratch off lottery ticket that promises to pay an initial payment of 1,000 this year and grow at a rate of 5% forever. If the discount rate is 6%, what is the present value of this investment?

Reference no: EM13987747

Questions Cloud

The statistics budget : The statistics budget:
Funds left in this bucket in your parents portfolio : Your brother Adam has decided to enter graduate school in 4 years. Your parents have been saving $ 5000 per year for the last 7 years. The 4 years have passed and he chooses Officer’s Training School instead. With a degree in finance you know that th..
Describe the size-structure and composition of mutual fund : Describe the size, structure and composition of the mutual fund industry. Do you consider these characteristics as having a positive or negative impact on investors? Why?
Legitimate areas of community benefit : The Catholic healthcare association recognizes which of the following as legitimate areas of community benefit?
What is the present value of this investment : You win a scratch off lottery ticket that promises to pay an initial payment of 1,000 this year and grow at a rate of 5% forever. If the discount rate is 6%, what is the present value of this investment?
Cash flows from operations and free cash flows : Determine the after cash flows from operations and free cash flows. Prepare a statement of free cash flows using table below.
Critical drivers that influence performance attainment : Which of the following is not one of the four critical questions that must be answered for dashboard reporting? What is the firm's strategic vision? what is most important to the firms success? what are critical drivers that influence performance att..
Net income and cash flow from operations : Using the following information below, prepare cash flow statement using the table below. Determine the following: net income, cash flow from operations, cash flow from investment activites cash flow from financing activities, increase in cash and en..
Securities-which portfolio has the lowest risk : Suppose there are three securities (A, B, and C) to choose from to create your portfolio. Next year the economy will be in an expansion, normal, or recession state with probabilities 0.40, 0.33, and 0.27, respectively. where the numbers inside parent..

Reviews

Write a Review

Financial Management Questions & Answers

  Produce annual pre-tax cash flows

Orino Corp. is considering a project that will produce annual pre-tax cash flows of $1.4 million for the next 22 years. The firm has a debt-to-equity ratio of 1.6, where the debt has a yield of 9.0% and the cost of equity is 17.0%. Assuming that the ..

  Equity outstanding and bonds outstanding

Consider two firms A and B that are identical in all respects except capital structure. Firm A has $100 million in equity outstanding and $40 million in bonds outstanding. Firm B has $140 million in equity outstanding and $0 million in bonds outstand..

  Forecast at their highest expected level under worst case

Which of the following variables will be forecast at their highest expected level under a worst case scenario?

  About the margin purchase

You are bullish on GE and expect a rise in its share price in one year. Since you have only $10,000 available, you want to get a margin loan. The annual interest rate on margin loan is 4% and your broker requires a maintenance margin of 35%. If you b..

  Do you think piedmont will overestimate npv of the project

The components produced are to be exported to Piedmont's headquarters in Italy, where they will be used in the production of computers. Do you think Piedmont will overestimate or underestimate the net present value of this project

  Two different salary arrangements

You've just joined the investment banking firm of Dewey, Cheatum, and Howe. They've offered you two different salary arrangements. You can have $95,000 per year for the next two years, or you can have $70,000 per year for the next two years, along wi..

  What is the bonds nominal coupon interest rate

O'Brien Ltd.'s outstanding bonds have a $1,000 par value, and they mature in 25 years. Their nominal yield to maturity is 9.25%, they pay interest semi annually, and they sell at a price of $975. What is the bond's nominal coupon interest rate?

  Calculate the depreciation expense

You are given the following information for Gandolfino Pizza Co.: sales = $42,000; costs = $21,300; addition to retained earnings = $7,250; dividends paid = $1,200; interest expense = $5,300; tax rate = 35 percent. Calculate the depreciation expense.

  What is the net income for this firm

Billy’s Exterminators, Inc., has sales of $604,000, costs of $308,000, depreciation expense of $60,000, interest expense of $40,000, and a tax rate of 35 percent. What is the net income for this firm?

  What is the present value of your winnings

What is an opportunity cost rate and how is this rate used in time value analysis and what is the present value if the opportunity cost rate is 10 percent?

  What is the average real risk premium

You’ve observed the following returns on Doyscher Corporation’s stock over the past five years: –24.6 percent, 13.4 percent, 29.8 percent, 2.2 percent, and 21.2 percent. The average inflation rate over this period was 3.22 percent and the average T-b..

  Research project and presentation of commodity

Please complete a research project and presentation of a commodity, its global implications and all other relevant information. Collect information and data on all relevant aspects of the commodity. That information should include but not be limited ..

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