Essay on Fiance Homework

For Investment B: (40 – 5)/ 30= 1.16 standard units= close to 88% to get the 40 million in

Before moving forward to compute the present value of these cash flows, a terminal value is required to forecast the long term value of the company after 5 years. . Following formula is used to calculate the terminal value.

a) Assuming the opportunity interest rate is 6%, what is the present value of the second alternative?

11. What are the amounts and timing of the acquisition investment’s free cash flow from 2013 through 2022? You will need to find an appropriate growth rate and extend Exhibit 6 out through 2022.

b. What is the present value of this annuity if the opportunity cost rate is 10% annually? 10% compounded semiannually?

Given that the total profit over 8 years is $1.2375B (or $155M per year for 8 years), we will now compute the Present Value of this amount using the following formula:

9. You want to purchase a business with the following cash flows. How much would you pay for this business today assuming you needed a 14% return to make this deal?

See Table 1: Expected non-operating cash flow when the project is terminated at year 4 = 165,880$

4.) What would the capital allocation plan look like if an additional $100,000 is made available?

Step Three: Draw out a timeline, and then take the present value of all cash flows

* Determine the investment’s value without leverage, VU, by discounting its free cash flows at the

9 Machine Cost Duration (years) Cash Flows Cost of capital Payback (years) 35000 15 5000 12% total cost annual cash flow

You need to make a decision on whether to invest RM146300 in Project Y or Project Z that guarantees the following cash flow and annual relevant cost at the end of each year as indicated in the table below.

add it to the investment in fixed assets and add the present value of the recovery to the present value of the annual cash flows

The time values associated with the working capital indicates a time value adjusted present value of –SFr 203,408.03. (The present value of recovering SFr 300,000 ten years from now at 12% is SFr 96,591.71). This negative amount pulls the project present value from a strong positive level to a slightly negative amount.