Time value of money-calculate the present value

Assignment Help Financial Management
Reference no: EM131915205

Time Value of Money A. Calculate the following time value of money figures: 1. Calculate the present value of the company based on the given interest rate and expected revenues over time. 2. Suppose the risk of the company changes based on an internal event. Recalculate the present value of the company. 3. Suppose that a potential buyer has offered to buy this company in five years. Based on the present value you calculated above, what would be a reasonable amount for which the company should be sold at that future time? B. What are the implications of the change in present value based on risk? In other words, what does the change mean to the company, and how would you, as a financial manager, interpret it? Be sure to justify your reasoning. C. Based on the future value of the company that you calculated, and being mindful of the need to effectively balance portfolio risk with return, what recommendation would you make about purchasing the company as an investment at that price? Be sure to substantiate your reasoning. Free Cash flows =Fiscal Year Capital Leases Operating Leases (FY 15) Free Cash Flows: FCF 1- FCF 5 in millions 2015- $ 113,000 2016 -111,000 2017 -108,000 2018 -101, 000 2019 -97, 000 at 8%

show calculations

Reference no: EM131915205

Questions Cloud

How much will this trust be worth in the year 2020 : In 1960, your grandmother put $1000 into a special trust to be paid to a future grandchild (you) 60 years later, in the year 2020.
What is the maximum upside and downside : What is the maximum upside (gain) and downside (loss)
What is the net cash flow from operations for april : Ryan & Wang Ltd is a company that commenced business on 1 April 2015. What is the net cash flow from operations for April 2015
Applying pmbok concepts to process change : Describe how Six Sigma would be used to evaluate, measure, and encourage continuous improvement concerning the scenario topic you chose
Time value of money-calculate the present value : Calculate the present value of the company based on the given interest rate and expected revenues over time.
Define depreciation and explain purpose of journal entries : What is the difference between the trial balance and the adjusted trial balance? Define depreciation and explain the purpose of the journal entries
Analyze the principles and strategies of treatment options : Analyze the principles and strategies of treatment options in the USA. Use this rubric and make sure to include certain required information.
What is the number of shares issued and outstanding on march : A share split of 5 for 1 was approved on December 31, 2014. What is the number of shares issued and outstanding on March 1, 2015
What is tom standard deduction and taxable income : Tom is a 17 year old dependent of his parents. Tom earned $3000 working part time at a car wash in 2017. What is Tom standard deduction and taxable income

Reviews

Write a Review

Financial Management Questions & Answers

  What happens if an illegal alien is arrested

As a budget manager, describe how can you limit problems with free riders. What happens if an illegal alien is arrested?

  What is the expected annual cash flow

Cooper Commons is considering purchasing new, technologically advanced solar panels. The equipment will cost $625,000 with a salvage value of $50,000 at the end of its useful life of 10 years. The excess electricity from the panels will be sold back ..

  Find an article about a company reporting key financial news

Search current news (less than 6 months old) and find an article about a company reporting key financial news (e.g. landing a large contract, reporting unusual profits or losses, expressing concern for future profitability, etc.). Briefly review the ..

  What is the current value of share

What is the current value of a share if the appropriate discount rate is 12 percent?

  What is the current value of one-year european call option

Using a one-step binomial tree, what is the current value of a one-year European call option on XYZ with an exercise price of $12?

  What are implications of efficient markets hypothesis

What are the implications of the efficient markets hypothesis for investors who buy and sell stocks in an attempt to "beat the market"?

  Which would require the purchase of piece of equipment

Middlefield Motors is evaluating project A, which would require the purchase of a piece of equipment for 382,000 dollars. During year 1, project A is expected to have relevant revenue of 193,000 dollars, relevant costs of 66,000 dollars, and some dep..

  Requires investment-what is the project payback period

A project requires an investment of $120,000 today, The company’s weighted average cost of capital is 10.2% per year. What is the project’s payback period?

  Healthcare organizations during strategic planning process

Discuss the importance of financial data and its impact on healthcare organizations during the strategic planning process.

  What is the price of a three-month european put option

The price of a non-dividend paying stock is $19 and the price of a three-month European call option on the stock with a strike price of $20 is $1.2. The risk free rate is 4% per annum. What is the price of a three-month European put option with a str..

  What is the yield to maturity if a bond has a price

What is the yield to maturity if a bond has a price of $10000 and pays $350 of interest annually forever? Suppose you have $50,000 annual disposable income and would like to spend 30% of the income on the mortgage payment. Find the highest affordable..

  Bond with face value-what is the bond price

A bond with face value $1,000 has a current yield of 6.9% and a coupon rate of 8.9%. a. If interest is paid annually, what is the bond’s price?

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