Al.Interest Rate8%FCF - 2016 FCF - 2017FCF - YearsAmounts*FCF - 2015Adjusted3,573.006,082.006,007.00Pv*(2,836.36)(5,150.03)(5,631.48)Total Pv**In millions(13,617.88)Pv=FVN/(1+1)^NPV(IN,0,FV)$ 13,617.882014 PV of FCF=* The PV is NOT a negative number. It is a posiive number. This negative values calculated hereare a result of the PV formula only. A2.Interest Rate8%FCF - YearsFCF - 2015FCF - 2016 FCF - 201710% DecreaseAmounts*5,473.805,406.303,215.70(2,552.73)Py*(5,068.33)(4,635.03)Total Pv**In millions(12,256.09)PV(I,N,0,FV)Pv-FVN/(1+1)^NS 12,256.092014 PV of Reduced FCF =* The PV is NOT a negative number. It is a posiive number. This negative values calculated hereare a result of the PV formula only.

Question
Asked Jan 8, 2020
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What are the implications of the change in present value based on risk (a decrease in FCF by 10%)? In other words, what does the change mean to the company, and how would a financial manager interpret it?

Al.
Interest Rate
8%
FCF - 2016 FCF - 2017
FCF - Years
Amounts*
FCF - 2015
Adjusted
3,573.00
6,082.00
6,007.00
Pv*
(2,836.36)
(5,150.03)
(5,631.48)
Total Pv*
*In millions
(13,617.88)
Pv=FVN/(1+1)^N
PV(IN,0,FV)
$ 13,617.88
2014 PV of FCF=
* The PV is NOT a negative number. It is a posiive number. This negative values calculated here
are a result of the PV formula only.
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Al. Interest Rate 8% FCF - 2016 FCF - 2017 FCF - Years Amounts* FCF - 2015 Adjusted 3,573.00 6,082.00 6,007.00 Pv* (2,836.36) (5,150.03) (5,631.48) Total Pv* *In millions (13,617.88) Pv=FVN/(1+1)^N PV(IN,0,FV) $ 13,617.88 2014 PV of FCF= * The PV is NOT a negative number. It is a posiive number. This negative values calculated here are a result of the PV formula only.

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A2.
Interest Rate
8%
FCF - Years
FCF - 2015
FCF - 2016 FCF - 2017
10% Decrease
Amounts*
5,473.80
5,406.30
3,215.70
(2,552.73)
Py*
(5,068.33)
(4,635.03)
Total Pv*
*In millions
(12,256.09)
PV(I,N,0,FV)
Pv-FVN/(1+1)^N
S 12,256.09
2014 PV of Reduced FCF =
* The PV is NOT a negative number. It is a posiive number. This negative values calculated here
are a result of the PV formula only.
help_outline

Image Transcriptionclose

A2. Interest Rate 8% FCF - Years FCF - 2015 FCF - 2016 FCF - 2017 10% Decrease Amounts* 5,473.80 5,406.30 3,215.70 (2,552.73) Py* (5,068.33) (4,635.03) Total Pv* *In millions (12,256.09) PV(I,N,0,FV) Pv-FVN/(1+1)^N S 12,256.09 2014 PV of Reduced FCF = * The PV is NOT a negative number. It is a posiive number. This negative values calculated here are a result of the PV formula only.

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Step 1

Present Value:

It is the current or discounted value of the future inflow and outflow. It is calculated by discounting the future inflow and outflow with the help of the specified interest rate. In excel it is calculated by using the PV functio...

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