What is the present value of your firm cash flows for years

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Reference no: EM132000449

Your consulting firm will produce cash flows of $165,000 this year, and you expect cash flow to keep pace with any increase in the general level of prices. The interest rate currently is 5.7%, and you anticipate inflation of about 1.7%.

a. What is the present value of your firm’s cash flows for years 1 through 4? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Present value

b. How would your answer to (a) change if you anticipated no growth in cash flow? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Present value

5. Lenny Loanshark charges “1.09 points” per week (that is, 1.09% per week) on his loans. What APR must he report to consumers? Assume exactly 52 weeks in a year. What is the effective annual rate? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

Annual percentage rate %

Effective annual rate %

Reference no: EM132000449

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