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Q: Consider the cash flow diagram below. F n If P = 65. n = 9 and i = 16%, the value of E is
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Q: What is the present worth for the investment represented by the given cash flow? Interest is 12%.
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Q: How is IRR calculated with unequal net cash inflows?
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Q: According to Descartes’ rule of signs, the possible number of rate of return values for the net cash…
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Q: In the net present method future, cash flows are discounted to their present value a)TRUE b) FALSE
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Q: What is the process of solving a cash flow for an unknown interest rate?
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Q: To find NPV, it requires
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A: Present value means worth of a dollar today Future value worth of a dollar in future.
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A: Discount Rate: It is the rate at which the cash flows over the period are discounted.
If cashflows are discounted @
the
zero.
O a. RATE OF BORROWING
O b.
O c.
O d. MIRR
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- Which of the following discounts future cash flows to their present value at the expected rate of return, and compares that to the Initial Investment? A. internal rate of return (IRR) method B. net present value (N PV) C. discounted cash flow model D. future value methodIf cashflows are discounted at____ the net present value is zero a. Internal rate of return O b. Wighted average cost of capital O c. Higher payback period O d. Any payback periodThe internal rate of return is: the discount rate that equates the present value of the cash inflows with the present value of the cash outflows. the discount rate that makes NPV negative and the PI greater than one. the rate of return that makes the NPV positive. the discount rate that makes the NPV positive.
- Consider the calculation of an external rate of return (ERR). The positive cash flows in the cash flow profile are moved forward to t = n using what value of i in the (F|P,i,n–t) factors? a. 0 b. The unknown value of ERR (i′) c. MARR d. IRR.Define the term reinvestment rate and describe how it differs for any cash flow series between (1) a PW value calculated at the MARR, and (2) the IROR value i*.Value in use is a) © Discount rateb) © Present value of future cash if flowsc) © Uncertainty of cash flowsd) O Time value of money
- The internal rate of return (IRR) is The same thing as the cost of capital. The discount rate that equates the present values of cash inflows and cash outflows. The same thing as the net present value. The same thing as the profitability index.To find NPV, it requires Choices: A.none of the choices B.discount rate and estimated cash flows C.investment amount plus discount rate D.discount rate and inflation rate E.estimated cash flow and capital structureThe discount rate to be used for calculating the present value of a stream of cash flow should be a)Bank rate b)Prime Lending Rate c)Treasury rate d)Opportunity cost
- When calculating an i* value, all net positive cash flows are assumed to be reinvested at:a. the current market interest rate.b. the i* rate.c. the company’s MARR.d. the company’s cost of capital.Determining the future value of one or more present day cash flows is known as ________. A. disinvesting B. annuitizing C. discounting D. compoundingWhat is the internal rate of return of the following cash flow diagram? a. 20.0% b. 18.2% c. 17.5% d. 15.0%.
