Consider a cash flow that lasts forten years.the initial value A occurs at the thirdyear, decreasing by 6% thereafter,what is the value of A if the presentequivalent for this series is $34,717,and the interest rate is 8% per year5669.7 $/year8454 $/year40495.7 $/year5000 $/yearO 7247 $/year

Present Value of series = 34,717 Interest Rate = 8% Annual Growth Rate = -6% Cash flows start at end…

Answered: Consider a cash flow that lasts for ten…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 19E

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An investment of 1,000 produces a net cash inflow of 500 in the first year and 750 in the second year. What is the payback period? a. 1.67 years b. 0.50 year c. 2.00 years d. 1.20 years e. Cannot be determined
Brook Corporation’s free cash flow for the current year (FCF0) was $3.00 million. Its investors require a 13% rate of return on (WACC = 13%). What is the estimated value of operations if investors expect FCF to grow at a constant annual rate of (1) −5%, (2) 0%, (3) 5%, or (4) 10%?
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You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.
(1) What is the value at the end of Year 3 of the following cash flow stream if the quoted interest rate is 10%, compounded semiannually? (2) What is the PV of the same stream? (3) Is the stream an annuity? (4) An important rule is that you should never show a nominal rate on a time line or use it in calculations unless what condition holds? (Hint: Think of annual compounding, when INOM = EFF% = IPER.) What would be wrong with your answers to parts (1) and (2) if you used the nominal rate of 10% rather than the periodic rate, INOM/2 = 10%/2 = 5%?

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Consider a cash flow that lasts for ten years. the initial value A occurs at the third year, decreasing by 6% thereafter, what is the value of A if the present equivalent for this series is $34,717, and the interest rate is 8% per year 5669.7 $/year 8454 $/year 40495.7 $/year 5000 $/year