Time value of money-purchase business with cash flows

Assignment Help Financial Management
Reference no: EM13944903

Time Value of Money/ Show your work (you can attach your excel worksheets)

You want to purchase a business with the following cash flows:

Year one          $100,000

Year two         $150,000

Year three        $200,000

Year four         $250,000

How much would you pay for this business today assuming you need a 14% return to make this deal?

Reference no: EM13944903

Questions Cloud

What is the required rate of return on firms equity : Johnson Inc has 2,000 bonds and 300,000 shares of common stock outstanding. The common stock has a beta of 1.3 and trades at $18 per share . The firm is in 40% tax bracket. The market risk premium is 6% and yield on 10 year U.S. treasuries is 4%. The..
Are entrepreneurial policies predominate or just growing : Are entrepreneurial policies predominate or just growing? Many people that were once employed by big corporation leaving (laid off) and starting their own businesses. The younger generation are following in the path as well (esp in the tech indust..
Write response about scenario of probability testing : In this scenario of probability testing we must decide if a certain drug is considered safe for trial on humans. The null hypothesis is the drug is considered safe. The alternative hypothesis is that the drug is considered unsafe
Compare the cfd predictions : Construct a straight pipe flow which will be laminar and compare the CFD predictions for the scenario with those you would expect from classical theory for a fully developed flow.
Time value of money-purchase business with cash flows : You want to purchase a business with the following cash flows: How much would you pay for this business today assuming you need a 14% return to make this deal?
Number of individuals with that z-score : Each month, the U.S. census bureau mails survey forms to 250,000 U.S. households asking questions about the people living in the household and about such things as motor vehicles and housing costs. Telephone calls are made to households that don't..
Identify three prominent figures in the harlem renaissance : Identify three prominent figures in the Harlem Renaissance, note the contributions of each, and note their collective impact on American society.
Martin and siehl definition of organizational culture : Martin and Siehl define organizational culture as: "The glue that holds together an organisation through shared patterns of meaning, consisting of core values, forms and strategies to reinforce content".
Two bonds in his portfolio that both have face value : An investor has two bonds in his portfolio that both have a face value of $1,000 and pay a 9% annual coupon. Bond L matures in 14 years, while Bond S matures in 1 year. Assume that only one more interest payment is to be made on Bond S at its maturit..

Reviews

Write a Review

Financial Management Questions & Answers

  Capital gains are treated as income and get taxed

In U.S., capital gains are treated as income and get taxed. For securities, long-term gains have higher tax rate than short-term gains. When one invests in futures market, the gains/losses are realized every day, which is called daily settlement. The..

  Determine whether the account is profitable for the bank

The typical customer keeps an average monthly balance net of float equal to $ 116 in the account and pays a $ 3.25 monthly service charge. The bank must hold 10 percent required reserves against the average balance and thus can invest 90 percent of t..

  Based strictly on the calculations

Based strictly on the calculations, which proposals should be accepted or rejected. Use the appropriate divisional discount rate. The net present value provides the answer directly while the internal rate of return must be compared to the discount ra..

  What is this stocks expected total rate of return

You buy a share of The Ludwig Corporation stock for $19.40. You expect it to pay dividends of $1.07, $1.16, and $1.2576 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $28.27 at the end of 3 years. Calculate the growth rat..

  Firm purchased equipment three years

A firm purchased equipment three years ago for $22,047. Accumulated depreciation is $10,558, and the firm's tax rate is 29%. If the equipment is sold today for $17,406, how much net cash flow would be generated? Round your answer to the nearest whole..

  How quality of care may be increased and achieved

We respect and understand that quality of care is a worthy goal and absolute requirement for healthcare providing organizations. Give three examples of how quality of care may be increased and achieved.

  What is the variable cost per unit-cash break-even point

Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $15.80 per unit, and the variable labor cost is $6.50 per unit. a. What is the variable cost per unit? what is the cash break-even point? If depreciation is $500,..

  Preferred by a rational investor

For the following investments, state which would always be preferred by a rational investor (assuming that these are the only investments available to the investor):

  What is effective annual interest rate of this trade credit

The D.J. Masson Corporation needs to raise $600,000 for 1 year to supply working capital to a new store. Masson buys from its suppliers on terms of 1/10, net 90, and it currently pays on the 10th day and takes discounts. However, it could forgo disco..

  Operating expenses are planned

A buyer plans on net sales of $2,000,000 for the coming year. Operating expenses are planned at $700,000 and retail reductions are planned at $300,000 with returns and allowances from customers at $50,000. Management wants a profit of $300,000 from t..

  Mortgage interest rate they offer you on your credit rating

Mortgage lenders base the mortgage interest rate they offer you on your credit rating. This makes it financially critical to maintain a credit score of 700 or higher. How much more interest would you pay on a $184,000 home if you put 20% down and fin..

  Preferred stock currently trades

EcoTours, Inc.'s perpetual preferred stock currently trades at $69.75 per share, and it pays a $1.35 quarterly dividend. If the company were to sell a new preferred issue, it would incur flotation costs of 4.50% of the issue price. What is EcoTours' ..

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