($ thousands)Net cash flowPresent value at 20%Net present valuePeriod0-13,100123456-13,100-1,534-1,2782,9976,3732,0813,68810,5845,10410,0355,80773,3194,0331,9459263,399 (sum of PVs)Restate the above net cash flows in real terms. Discount the restated cash flows at a real discount rate. Assume a 20%nominal rate and 10% expected inflation. NPV should be unchanged at +3,399, or $3,399,000.Note: Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Enter your answersin thousands rounded to the nearest whole number.Year 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7Real Net Cash FlowsNPV$(13,100)

The real interest rate, as defined by the Fisher equation, represents the nominal interest rate…

Answered: ($ thousands) Period Net cash flow…

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

Section: Chapter Questions

Problem 8EP

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Xander Inc. has prepared the following sensitivity analysis: Line Item Description Amount Amount Amount Estimated Annual Net Cash Flow $500,000 $600,000 $700,000 Present value of annual net cash flows (× 4.487) $2,243,500 $2,692,200 $3,140,900 Present value of residual value 50,000 50,000 50,000 Total present value $2,293,500 $2,742,200 $3,190,900 Amount to be invested (3,000,000) (3,000,000) (3,000,000) Net present value $(706,500) $(257,800) $190,900 In addition, it has assigned the following likelihoods to the three possible annual net cash flows: $500,000, 70%; $600,000, 20%; and $700,000, 10%. Based on an expected value analysis, which of the following statements is accurate? a. The expected value of the annual net cash flow is $540,000, and the project should be accepted. b. The expected value of the annual net cash flow is $660,000, and the project should be accepted. c. The expected value of the annual net cash flow is $660,000, and the project…
Determine the ERR (External rate of return) of the cash flows if external rate (e) is given as %19. Year Cash Flow 0 -3000 1 2000 2 4000 3 -1000 4 3000 5 4000 6 -5000 7 9000 Select one: a. 0.2988 b. 0.2638 c. 0.2565 d. 0.3073 e. 0.2783 f. 0.3491
Find the NPV for the following cash flows assuming a WACC of 10%. YR CF 0 -15,000 1 6,000 2 4,000 3 2,000 4 3,000 5 2,000
What is the present value of the following cash flow stream at a rate of 12.00%? Years: 0 1 2 3 4 CFs: $0 $75 $225 $0 $300 Select one: a. $511.28 b. $402.03 c. $546.24 d. $441.36 e. $436.99
For the cash flows shown, the correct equation for FW2 using the ROIC method at the reinvestment rate of 20% per year is:a. [10,000(1+ i'' ) + 6000](1.20) - 8000b. [10,000(1.20) + 6000(1+i'' )](1.20) - 8000c. [10,000(1.20) + 6000](1.20) - 8000d. [10,000(1.20) + 6000](1+ i'' ) - 8000
What is the present value of the following cash flow stream at a rate of 10.0%? Years: 0 1 2 3 CFs: $750 $2,450 $3,175 $4,400 a. $10,755.00 b. $13,143.15 c. $11,855.25 d. $9,722.73 e. $8,907.02
What is the Net Present Value of the following cash flow stream? Year Cash Flow 0 -$1,977 1 $421 2 $889 3 $517 4 $939 Assume an interest rate of 3%
Assuming today is 1st January 2021. Date Cash flows (Rs.) 01-Jan-21 (900,000 ) 31-Dec-21 0 31-Dec-22 240,000 31-Dec-23 320,000 31-Dec-24 490,000 31-Dec-25 250,000 31-Dec-26 345,000 Cost of Capital = 8% Required: Net Present Value (NPV) Payback period (Simple and discounted) Internal Rate of Return (IRR) Solve At Excel.
Consider the following information:· Net income = $100 000· Gross income = $300 000· Change in book value of assets = ($50 000)· Cost of equity = 12 per centUsing the discounted cash flow model, what would be the present value of free cash flows at t+1?
What is the internal rate of return for the following set of cash flows?Year Cash Flow0 -$60,0001 20,0002 20,0003 40,0004 40,000 Do not answer in excel format. Please give formula/handwritten or TI-84 calculator method
From the following data, calculate internal rate of return (IRR) Year Cash Flow(Rs) 0 (3,84,000) 1 1,50,000 2 1,25,000 3 1,00,000 4 75,000 5 55,000
Project MM has the following cash flows:End-of-Year Cash Flows ---------------------------------0 1 2 32$1,000 $2,000 $2,000 2$3,350Calculate MM’s NPV at discount rates of 0%, 10%, 12.2258%, 25%, 122.1470%,and 150%. What are MM’s IRRs? If the cost of capital is 10%, should the project beaccepted or rejected?

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