Calculate the present value of the streams of cash flow

Assignment Help Financial Management
Reference no: EM13879613

1. With a 10% interest rate, calculate the present value of the following streams of cash flow

$1,000 per year forever

$500 per year forever, with the first payment two years from now

$2,420 per year forever, with the first payment three years from now.

2. Suppose you deposit $100 at the end of each year for three years in an account paying 8%. What is the present value of the cash flow stream? (Equal Cash Flow)

Reference no: EM13879613

Questions Cloud

What is the effective annual interest rate on the loan : If you take out a $9,000 car loan that calls for 48 monthly payments at an APR of 10%. What is your monthly payment? What is the effective annual interest rate on the loan?
Write the standard form of this lp problem : Assume that the farmer's objective is to minimize the cost per cow of buying any com- bination of these three feeds that satisfy the daily nutrient requirements of the cow.
Annual compounding for amortization schedule of mortgage : A family currently lives in an apartment whose monthly rent is $950. They are thinking of buying a house which would cost $220,000. They plan to live in this house for 5 years and sell it at the end of the 5th year. Note that property taxes are tax d..
New investment that it plans to finance using one-third debt : The Walgreen Corporation is contemplating a new investment that it plans to finance using one-third debt. the firm can sell new $1000 par value bonds with a 15 year maturity at a price of $947 that carry a coupon interest rate of 12.8 percent that is..
Calculate the present value of the streams of cash flow : With a 10% interest rate, calculate the present value of the following streams of cash flow. Suppose you deposit $100 at the end of each year for three years in an account paying 8%. What is the present value of the cash flow stream? (Equal Cash Flow..
What would value be if first cash flow occurs in two year : You have won the Florida state lottery. Lottery officials offer you the choice of the following alternative payments. What is the value of an investment that pays $100 every year forever with the first cash flow occurring in one year? What would the ..
Appropriate differential control volume : Beginning with an appropriate differential control volume, obtain an equation that could be used to determine the mean air temperature Tm(x) as a function of distance along the channel. Solve this equation to obtain an expression for the mean temp..
Merchandise inventory : how will net income be affected in 2013?
What is the expected market risk premium : The common stock of United Industries has a beta of 1.34 and an expected return of 14.29 percent. The risk-free rate of return is 3.7 percent. What is the expected market risk premium?

Reviews

Write a Review

Financial Management Questions & Answers

  About the rate of interest

Bank of America has granted you a ten year loan for $65,000. If your ten annual end of the year payments are $13,380.50, what is the rate of interest Bank of America is charging?

  Identified an investment project with the cash flows

Huggins Co. has identified an investment project with the following cash flows. If the discount rate is 10 percent, what is the present value of these cash flows? What is the present value at 18 percent? At 24 percent?

  Supplier-customer relationship

The category of business combination where the firms have a supplier-customer relationship is known as a ___.

  Method of depreciation for all assets

What factors may contribute to the decline in usefulness of operating assets? Should the choice of depreciation method be related to these factors? Must a company choose just one method of depreciation for all assets? Explain

  Other miscellaneous closing costs

You are about to purchase your first home for a purchase price of $323,210 and would like to know the amount of money needed at closing. You will place a 17% down payment and will pay 2 points on the loan. Other miscellaneous closing costs (appraisal..

  Retirement fund

You want to earn the equivalent of $3500 per month over the expected 25 years of your retirement. You plan to retire in 40 years and can earn 12% on your savings till retirement and 8% on the retirement fund once you retire. How much will you have to..

  An analysis of the revised project

Evaluate the project in light of this new information

  Refuse to renew the loan and bankruptcy will result

The Morris Corporation has $600,000 of debt outstanding, and it pays an interest rate of 8% annually. Morris’s annual sales are $3 million, its average tax rate is 40%, and its net profit margin on sales is 3%. If the company does not maintain a TIE ..

  Describe the product life cycle for managing products

Describe the product life cycle as a useful tool for managing products after they have been introduced to foreign markets.

  Annual investments in a fund

Suppose you make 30 annual investments in a fund that pays 4% compounded annually. If your first deposit is $9,000 and each successive deposit is 4% greater than the preceding deposit, how much will be in the fund immediately after the 30th deposit?

  Growth rate in dividends-what is the current share price

Lohn Corporation is expected to pay the following dividends over the next four years: $18, $14, $13, and $6.50. Afterwards, the company pledges to maintain a constant 4 percent growth rate in dividends forever. If the required return on the stock is ..

  Explain the concept of triple bottom line principles

The incorporation of triple bottom line principles in work planning is a move many organisations have made. Explain the concept of triple bottom line principles.

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