Answered: Find the present value of cash flows,…

Business

Finance

Find the present value of cash flows, assuming that the firm’s opportunity cost is 14 percent.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 5Q: Suppose a firm estimates its overall cost of capital for the coming year to be 10%. What might be...

See similar textbooks

Related questions

Q: Projected free cash flows should be discounted at the firm's weighted average cost of capital to…

A: In this question we are required to tell whether the given the statement is True or False and…

Q: Year Cash Flow 0 –$ 17,200 1 9,500 2 8,400 3 4,900 a. What is the profitability…

A: profitability index = Present value of cashflow / initial investment

Q: Consider the following cash flows: Year Cash Flow 0 −$28,300 1 15,400 2 13,500 3…

A: The profitability index is the ratio between the present value of future cash flows and the initial…

Q: For the given cash flow of geometric gradient, if A= $8,000 , the present value, P is closest to: A…

A: We need to compute the present value of the given cash flows series.

Q: much arbitrage profit can an investor earn on an investment value of CAD 2 million?

A: Arbitrage profit is the profit which has occurred due to the fact of the either the interest rate…

Q: For the net cash flow series, find the external rate of return (EROR) using the MIRR method with an…

A: The given problem can be solved using MIRR function in excel.

Q: Required: la. Compute the average rate of return for each investment. If required, round your answer…

A: Average rate of return : It is the average annual yield on the project i.e., average profit after…

Q: a. What is the capital recovery cost? b. What is the minimum amount of annual revenue ($? per year)…

A: The amount which shows the return of the amount invested is known as capital recovery cost. The…

Q: compute the Net Present Value of the following set of cash flows:

A: Excel Workings:

Q: Yıl Nakit akışı 0 -1000 TL 1 +300 TL 3 +300 TL 4 +300 TL 5 +300 TL

A: Internal Rate of Return is the rate at which NPV of the Investment is zero. It is compared with MARR…

Q: Which of the following is the correct definition for present value (PV)?

A: Present value is an important concept in finance which is based on the concept of time value of…

Q: What is the cash conversion cycle (CCC)? Whyis it better, other things held constant, to have a…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: The following cash flow diagram represents an investment of Php 400 and revenue of x at the end of…

A: In order to have net present worth to be zero, Present value of end of year cash flows = Initial…

Q: Calculating Profitability Index [L07] What is the profitability index for the following set of cash…

A: The Profitability index = Present value of future cash inflow / Initial Investment

Q: Assuming a 1-year, money market account investment at 3.98 percent (APY), a 3.13% inflation rate, a…

A: given information money market account investment = 3.98% inflation rate = 3.13% marginal tax = 10%…

Q: Suppose a firm estimates its overall cost of capital for the coming year to be10%. What might be…

A: In the event that the total computation of an organization's Weighted Average Cost of Capital was 10…

Q: A manufacturer projects the cash flows shown below. Determine the rate of return if the cash flows…

A: Rate of return at which the Present value of future cash flows is 0.

Q: Given cash flows for Concatenator Manufacturing Division, calculate PV of near- term cash flows, PV…

A: Here, r is 10% g is 6% Free Cash Flows are as follows:

Q: Requirements: (a) What is the cash payback period for this proposal? (b) What is the annual rate of…

A: cash pay back period is the period by which the initial investment is recovered. so it 2 years +…

Q: margin of $6, projected fixed cos ost per unit of $ 12, and a projected present value break-eve…

A: Note : As per the guidelines, only first question will be answered. Kindly post the remaining parts…

Q: For the arithmatic gradient of cash flow given below, if G= $150 , the value at year 24(V2

A: 'G' refers to the amount by which cash flows increases every year.

Q: Assuming a 1-year, money market account investment at 4.97 percent (APY), a 2.96% inflation rate, a…

A: Answer 1: Information Provided: APY = 4.97% Inflation rate = 2.96% Marginal tax = 28% Balance =…

Q: Find the uniform annual equivalent for the following cash flow diagram if 10%. Use the appropriate…

A: UNIFORM ANNUAL EQUIVALENT FORMULA: EUAC=r×NPV1-1+r-n where, r = discount rate n = no of years

Q: What is the profitability index for an investment with the following cash flows given a 20 percent…

A: The Profitability Index(PI) is one of the capital budgeting techniques that take into consideration…

Q: Find the present value of the following stream of cash flows, assuming that the firm’s required…

A: >Present value is the value of future value that can be earned today. >This can get…

Q: For the cash flow shown below. Find the external rate of return (EROR) using rate of return approach…

A: Cash Flow Statement is a part of the Financial Statement of a company. It literally means a…

Q: Assuming cash flows arise evenly through the year, what is the payback period of this investment?

A: The payback period is the time period in which the cash flows will recover the full amount of…

Q: 16. You are considering an investment with the following cash flows: Year Cash Flow 0…

A: Year Cash Flow 0 -$50,000 1 $ 7,000 2 $ 4,000 3 $9,000 4 $61,000

Q: For the net cash flow series, find the external rate of return (EROR) using the MIRR method with an…

A: Formula used for calculating EROR using MIRR is:

Q: Incremental cash flow is calculated as (cash flowB− cash flowA), where B represents the alternative…

A: Incremental cash flows are the cash flows that are left after meeting initial cash requirements as…

Q: According to Descartes' rule of signs, how many possible i values are there for the cash flows…

A: Information provided: Year Cashflows 0 -9000 1 4100 2 -2000 3 -7000 4 12000 5 700…

Q: Determine the internal rate of return (interest rate at which NPW - $O) if the same set of cash…

A: The given problem can be solved with interpolation technique.

Q: Cash Year Flow -24 9,600 4,700 2 5,300 3 2,200 a. What is the profitability index for the cash flows…

A: Profitability index= PV of cash inflows/ PV of cash outflows

Q: Assuming a 1-year, money market account investment at 5.38 percent (APY), a 3.1% inflation rate,…

A: Real rate of return is the rate which is actually earned on the investment after adjusting the…

Q: In what way is the setup for finding a project’s cash flows similar tothe projected income…

A: When a project's cash flow is to find out then net income is taken into consideration and most…

Q: Assume that the following ratios are constant. Total asset turnover 1.37, profit margin 6.9%, equity…

A: Total asset turnover =1.37 profit margin= 6.9% equity multiplier= 1.7 payout ratio=57%.

Q: Assuming a 1-year, money market account investment at 2.51 percent (APY), a 1.1% inflation rate, a…

A: After tax rate of return will be calculated to get the exact return a person earn from investment…

Q: Find teh present value of the streams of cash flows shown in the following table. Assume that…

A: Opportunity cost = 14%

Q: the arithmatic gradient of cash flow given below, if G= $150 , the value at year 23(V23) is:

A: 'G' refers to the amount by which cash flows increases every year.

Q: In the accompanying diagram, what is the value of K on the left-hand cash-flow diagram that is…

A: Present value of future amount With interest or discount rate (i), period (n) and future value (FV),…

Q: Find the present value of the stream of cash flows shown in the follwing tables. Assume that the…

A: Opportunity cost = 15%

Q: or the nonconventional net cash flow series shown, the external rate of return per year using the…

A: ERROR is the external rate of return, MIRR is the modified internal rate of return, b is the…

Q: The present value of the net cash flows for Product A is $65,145 while the cost of the initial…

A: The question is based on the concept of Financial Management. Profitability index is the ratio of…

Question

Find the present value of cash flows, assuming that the firm’s opportunity cost is 14 percent.

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Suppose a firm estimates its overall cost of capital for the coming year to be 10%. What might be reasonable costs of capital for average-risk, high-risk, and low-risk projects?
Consider the following cash flow. Calculate the rate of return for an investment of 1000 TL.
What is the profitability index for an investment with the following cash flows given a 20 percent required return? Year Cash Flow 0 -$21,000.00 1 $7,200.00 2 $9,300.00 3 $8,500.00
For the given cash flows, suppose the firm uses the NPV decision rule.Year Cash Flow0 −$ 159,0001 57,0002 82,0003 66,000. a. At a required return of 8 percent, what is the NPV of the project. b. At a required return of 19 percent, what is the NPV of the project.
McCann Company has identified an investment project with the following cash flows. a. If the discount rate is 11 percent, what is the present value of these cash flows? b. What is the present value at 18 percent? c. What is the present value at 29 percent?
A firm has two possible investment with the following cash inflows. Each investment cost $480, and the cost of capital is ten percent. Cash Inflows Year A B 1 $300 $200 2 200 200 3 100 200 a. Based only on visual inspection, which investment is to be preferred and why? b. Based on each investment’s net present value, which investment(s) should the firm make? c. Based on each investment’s internal rate of return, which investment(s) should the firm make? Is this the same answer you obtained in part b? d. If the cost of capital were to increase to 14 percent, which investment(s) should the firm make?
Your company has a project available with the following cash flows : If the required return is 14 percent should the project be accepted based on IRR?
The present value of the net cash flows for Product A is $65,145 while the cost of the initial investment is $38,560. The profitability index is
For the net cash flow series, find the external rate of return (EROR) using the MIRR method with an investment rate of 25% per year and a borrowing rate of 11% per year. What is the external rate of return?
If the appropriate interest rate to use when evaluating potential project for the firm is 10%, what is the present value of these cash flows?
If An investment costs $23,958 and will generate cash flow of $6,000 annually for five years. The firm's cost of capital is 10 percent? a. What is the investment's internal rate return? Based on the net present rate return, should the firm makeinvestment? b.What is the investment's net present value? Based on the net present value, should the firm make the investment?
Find the present value of the following stream of cash flows, assuming that the firm’s required return is 14%. Year Amount $10,000 35,000 24,000 $121,256 $ 60,513 $ 69,000 $ 51,885