Answered: given the following stream of cash…

given the following stream of cash flows and an interest rate of 8 percent, what is its future value? Yr1=50, Yr2=60, Yr3=75, Yr4=80, Yr5=90

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 4MC: Suppose the free cash flow at Time 1 is expected to grow at a constant rate of gL forever. If gL <...

See similar textbooks

Related questions

Q: nbay Corporation is interested in estimating its additional financing needed to support a growth in…

A: The company need the money for growth and expansion and to sustain the growth over the longer period…

Q: Rick is part of an unusual bank, he comes in each quarter and spins a wheel to determine the amount…

A: The effective annual rate of interest will be calculated after consideration of the effect of…

Q: Economics (b) Rahmat plans to withdraw his money RM 3,090 each year for five years, beginning at the…

A: The future value of deposit includes the amount being deposited and amount of interest being…

Q: Calculate the net income after corporate income tax is paid for Quarter 2 from the following income…

A: Net Income means the Profit after tax which was earned by the company after deducting the all…

Q: Project L requires an initial outlay at t = 0 of $65,000, its expected cash inflows are $12,000 per…

A: As per the given information: Initial outlay - $65,000 Expected cash inflows - $12,000 for 9 years…

Q: Angelina is buying a home for $208,000. She has a $37,000 down payment and the bank b offered her a…

A: Loans are paid by the monthly payments and these are equal monthly installments and these carry the…

Q: Ontario Credit Union borrowed $275,000 at 9.5% compounded semi-annually from League Central to build…

A: As per our guidelines, we are supposed to answer only 3 sub-parts (if there are multiple sub-parts…

Q: ABC bought a piece of land in a highly developing area for a purchase price of P4,000,000. Directly…

A: The intrinsic value of a property is the replacement cost of the property, i.e., the price of an…

Q: A stock is currently trading at $57 and we assume a three-period binomial tree model where each…

A: The following flow chart shows the price up and drop in the stock :

Q: Capitalized cost is an application of perpetuity. It is the sum of the first cost and the present…

A: A perpetuity is a series of cash payments that have no maturity value. The capitalized cost is used…

Q: Calculate the combined default risk for company A and B from a combined bond issue of A and B:…

A: Default Risk : Default risk also called default probability is the probability that a borrower fails…

Q: 1- Jacinda Herschel wants to buy a car and determines she can afford to pay $412.00 a month for a…

A: Given: Particulars Amount Payment(PMT) $412 Years 3 Interest rate 2.95%

Q: starting 1 year from today, you will get 20 annual payments of $1,000,000. But to get your money…

A: a) Part a of the question is an example of ordinary annuity. It means when regular payments are made…

Q: ABC bought a piece of land in a highly developing area for a purchase price of P4,000,000. Directly…

A: Purchase Price P 40,00,000.00 Cots Incurred Buying P…

Q: starting 1 year from today, you will get 20 annual payments of $1,000,000. But to get your money…

A: a) Given Annual Payment "PMT" =$1000000 Inflation rate "r" = 10% Number of payment "n" = 20

Q: 3-year, (b) 5-year, and (c) 10-year fixed-rate investments.

A: Swap rates refer to the rate that is the fixed leg that is used to compute by its particular market…

Q: What is the present value of $900 to be received 10 years from now discounted back to the present…

A: Present value of cash flows is the value of receiving a future cash flow discounted back to the…

Q: s a yield to maturity of 4.29%. This bond makes Dayments per year and thus has 8 periods until…

A: *Answer:

Q: Steven's Auto Detailers is trying to decide whether to lease or buy some new equipment for polishing…

A: Given: Particulars Amount Cost of equipment $22,000 Life 3 After tax discount rate 6.20%…

Q: Taylor Company has a target capital structure that consists of $3.3 million of debt capital, $2.5…

A: WACC (Weighted Average Cost of Capital) : It represents a firm's average cost of capital from all…

Q: You must find the payback for a project, and you have misplaced some of the information that you…

A: Cash Flow $ 60,000.00 NPV $ 75,000.00 Time Period 5 WACC 10%

Q: opic: Option Pricing When computing, please do not round off. Only final answers must be rounded…

A: An in-the-money option provides an opportunity to earn profit as it has an intrinsic value and can…

Q: Topic: Option Pricing When computing, please do not round off. Only final answers must be rounded…

A: Black Scholes model This model is used to value options that have volatility. With stock price (S),…

Q: If the project’s weighted average cost of capital (WACC) is 7%, what is its NPV? a.)$340,887…

A: Payback period (PBP) refers to the period or duration within which the company is able to recover…

Q: Social Security is paid in with after-tax dollars but may be subject to tax if annual income exceeds…

A: Upto 85% of social security benefits are taxable for an individual with a combined gross income of…

Q: You have a balance of $7500 on your credit card and you make no further charges. If your APR is…

A: Data given: Balance on credit card = $7500 APR=12.5% Minimum payment = 5% of balance t=24 months…

Q: FV(Quar.) = $100(1.03)20 = $

A: Future value is the value of the asset at a future date compounded at a particular rate. It tells us…

Q: You would like to have $600,000 when you retire in 40 years. How much should you invest each quarter…

A: Here, To Find: Part a). Amount of deposit each quarter =? Part b). Total money deposited into the…

Q: Cage Corporation has current liabilities of $510,000, a quick ratio of .93, inventory turnover of…

A: Given that Current ratio = 1.5 = Current Assets(CA)/Current Liabilities(CL) Current Assets = 1.5 *…

Q: Jacqueline invested the profit of her business in an investment fund that was earning 2.50%…

A: Time value of money (TVM) refers to the method or concept which is used to determine the amount of…

Q: The bank is offering to sell 6-month certificates of deposit for $9800. At the end of 6 months, the…

A: Certificate of deposits are issued by the banks at discount and that discount is interest rate on…

Q: The internal rate of return on the extra investment in the hybrid is %. (Round to one decimal…

A: Information Provided: Price difference = $4290 Payback Period = 11 years Years driven = 14 years

Q: A company wants to invest $619,932 today. The expected returns in years 1, 2, and 3 are $244,539,…

A: Net Present Value ( NPV) is a capital budgeting techniques which help in decision making on the…

Q: What is the equivalent annual cost in years 1 through 9 of a contract that has a first cost of…

A: The equivalent annual cost is equivalent cost that would replace the all cost including initial cost…

Q: Social Security is a “pay-as-you-go” system. How

A: Social security refers to the protection which is provided by society to individuals or households…

Q: Heather Smith is considering a bond investment in Locklear Airlines. The $1,000 par value bonds have…

A: Par Value of $1,000 Quoted annual interest rate paid semi annually is 9% Yield to maturity is 12%…

Q: . His wage replacement ratio has been determined to be 72%. He expects inflation will average…

A: *Answer:

Q: Current Attempt in Progress A county will invest $3,600,000 to clean up a chemical spill that…

A: The Benefit to Cost ratio is used to find out how risky the project is and to compare equivalent…

Q: Jose is considering investing $100 in a project that has cash flows of $10 in one year, $0 in two…

A: IRR is the required rate of return for the project to have zero Net Present value. IRR can be…

Q: t i = 12% per year compounded semiannually, determine the pre he cash flows shown below. 0 1 2 3 600…

A: Present worth is equivalent money today that is equivalent to the future value of cash flow…

Q: with payments every two weeks. For a mortgage of $225,000 at 3.85%, which option results in the…

A: Information Provided (Q21): Loan amount = $225,000 Interest rate = 3.85% Year = 15 NOTE: As per…

Q: Problem 4-7 Calculating Sustainable Growth [LO3] The most recent financial statements for Mandy…

A: Solution:- Sustainable growth rate means the rate at which the entity will grow in future. It is…

Q: Expense Tuition $3700/year Rent and utilities $650/month Food $70/week Cell phone $40/month Clothing…

A: Budgeting is the summary of all the Expenses and income over the particular period of time based…

Q: Assume that Ford and GM are indentical firms. Using the comparable company analysis, which one…

A: PE Ratio is also known as Price Earning ratio. With the help of PE Ratio we can calculate the Price…

Q: 2. If this person's discount rate is 4%, how many years should they attend school? (Hint: convert…

A: Marginal Rate of Return: The marginal return is the return obtained by spending an additional unit…

Q: Explain why the Cedi continues to depreciate against most major international currencies and offer…

A: Currency is referred as the standardization of the money or its form, whether in case of circulation…

Q: Ex. 2 Calculate the combined default risk for company A and B from a combined bond issue of A and B:…

A: The company raises money by the issue of bonds but these bonds are subjected to risk of default and…

Q: The Investment and Merchant bankers in managing the IPOs provide one or more of the following…

A: IPO is issue of shares of company in market for common man and later on these are listed on stock…

Q: If a Company has 50% of its capital structure in debt with an interest rate of 5% and 50% in equity…

A: Weighted average cost of capital = After tax cost of debt * Weight of debt + Cost of equity * Weight…

Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

given the following stream of cash flows and an interest rate of 8 percent, what is its future value? Yr1=50, Yr2=60, Yr3=75, Yr4=80, Yr5=90

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

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 the free cash flow at Time 1 is expected to grow at a constant rate of gL forever. If gL < WACC, what is a formula for the present value of expected free cash flows when discounted at the WACC? If the most recent free cash flow is expected to grow at a constant rate of gL forever (and gL < WACC), what is a formula for the present value of expected free cash flows when discounted at the WACC?
Consider the following cash flow diagram. What value of C makes the inflow series equivalent to the outflow series at an interest rate of 10% compounded annually?
Consider the following future value problem. The respective cash flows for t = 0, 1, 2, and 3 are $3,000, $2,000, $8,000, and $5,000 and the discount rate is ten percent. What is the future value at t = 4?
Consider the following cash flow diagram. What is the value of X if the present worth of the diagram is $400 and the interest rate is 15% compounded annually? a. $246 b. $165 c. $200 d. $146.
Consider the cash flow shown in the graph and assume that the interest rate is 10%. What is the value of X at to ensure that cash flow shown has a future value of $1,500,000? Answer to the closest dollar.
A cash flow series is described by the following: $10,000 + $250(t), where t is the number of compounding periods. The present worth of this series at the end of five periods, where interest is 2% per t, is nearest what value? (a) $11,250 (b) $50,620 (c) $56,432 (d) $60,620?
Assume that an investment of $1,000 produces a future cash flow of $1,000. The discount factor for this future cash flow is 0.80. The NPV is?
Consider the following cash flow profile: Suppose the positive-valued cash flows are now replaced by a geometric series. If the cash flow at end of year 1 is $10,000, what geometric rate is required for the cash flow profiles to be equivalent? Interest is at a compounded annual rate of 6%.
Are the following shown cash-flow diagrams economically equivalent if the interest rate is 10% per year?
A sum of $10,000 now (time 0) is equivalent to the following shown cash-flow diagram: What is the value of $B if the annual interest rate is 4%?
At a rate of 8%, what is the present value of the following cash flow stream? $0 at Time 0; $100 at the end of Year 1; $300 at the end of Year 2; $0 at the end of Year 3; and $500 at the end of Year 4? use excel.
Consider the following cash flows. The interest rate is 10%. What is the duration (hint: you need PV)? Year 0 1 2 3 4 Cash flow 100 200 300 400