Value is always based on the future cash flows

Assignment Help Financial Management

Reference no: EM13728738

Roxanne invested $520,000 in a new business 3 years ago. The business was expected to bring in $8,000 each month for the next 25 years (in excess of all costs). The annual cost of capital (or interest rate) for this type of business was 4% with monthly compounding. What is the value of the business today? (Enter just the number in dollars without the $ sign or a comma and round off decimals.)

Hint: Value is always based on the future cash flows. You can refer to NPV, IRR, Payback or any other formulas you think is suitable

Reference no: EM13728738

Questions Cloud

The half-life of aspirin in the bloodstream is 12 hours : The half-life of aspirin in the bloodstream is 12 hours. How long will it take for the aspirin to decay to 70% of the original dosage?

Result of depositing a fixed instalment amount : What factor would you use to determine the future lump sum amount that could be withdrawn from a bank as a result of depositing a fixed instalment amount for "n" years? State its name and show its standard notation.

Find all possible pseudo-multiplication operations ? on z. : Find all possible pseudo-multiplication operations ⊗ on Z. For each operation you find, prove it has the three properties so you know it really is a pseudo-multiplication.

Quarter to make the purchase using an interest rate : A testing agency needs to purchase $40,000 worth of equipment 2 years from now. How much should the agency put aside each quarter to make the purchase using an interest rate of 20% per year, compounded quarterly?

Value is always based on the future cash flows : Roxanne invested $520,000 in a new business 3 years ago. The business was expected to bring in $8,000 each month for the next 25 years (in excess of all costs). The annual cost of capital (or interest rate) for this type of business was 4% with month..

What are the companys days sales in receivables : A company has net income of $265,000, a profit margin of 9.3 percent, and an accounts receivable balance of $145,300. Assuming 80 percent of sales are on credit, what are the company’s days’ sales in receivables?

Ideas and principles established by the well-known theorist : The ideas and principles established by the well-known theorist F.W. Taylor have implications for both operations and management even today. Describe briefly FIVE of these ideas and principles.

Managing conflict : Managing ConflictConflict within organizations is inevitable. To be effective, managers must diagnose conflict and choose the corresponding approach.Discuss different approaches to managing conflict.

User Account

All Pages