Calculate present discounted value of the annual cash flow, Business Economics

(present value) Suppose an entrepreneur considers to invest in a project. It needs a cash investment $I at year t = 0. If she/he invests, the project will generate an annual cash  flow $x from year t = 1 to year t = T. The annual interest rate is r (that is, if she/he deposits cash I in a bank, she/he will have I (1 + r) one year after).

(a) What is the present discounted value of the annual cash  flow at year t = 0?

(b) Suppose I = $100; x = $12; T = 10; and r = 5%: If you are the entrepreneur, will you invest in the project? Why?

Posted Date: 2/16/2013 12:26:45 AM | Location : United States







Related Discussions:- Calculate present discounted value of the annual cash flow, Assignment Help, Ask Question on Calculate present discounted value of the annual cash flow, Get Answer, Expert's Help, Calculate present discounted value of the annual cash flow Discussions

Write discussion on Calculate present discounted value of the annual cash flow
Your posts are moderated
Related Questions
WHAT STRATEGIES ARE SUGGESTED FROM THE CONVENTIONAL VIEW OF THE INDUSTRY LIFE CYCLE

Q.No2 Read the following situation Consider the following parlor game to be played between two players. Each player begins with three chips: One red, one white and one blue. Ea

discuss whether indian consumer goods industry is growing at the cost of future profitability

Consider the following four CP investors: Series A: $5m FV (and 2X liquidation preference) or converts to 5m shares; Series B: $10m FV or converts to 8m shares; Series C:

1. Imagine that two countries, Richland and Poorland can produce just two goods, computers and coal. Assume that for a given amount of land and capital, the output of these two pro

how starting assignment on this topic

Why is AIDs a major economic problem? AIDs are a tragedy which is affecting the structure and size of population. There AIDs is widespread in between the economically active th

What are the disadvantages of informal economy? Disadvantages of the informal sector are as illustrated below: • don’t pay direct taxes; • Can produce important pollutio