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- Title How will what you learned in this problem help you evaluate an investment? Description Preparing the statement of cash flows—direct method Use the Rolling Hills data from Problem 14-27A. Requirements 1. Prepare the 2012 statement of cash flows by the direct method. 2. How will what you learned in this problem help you evaluate an investment?3. Present value Finding a present value is the reverse of finding a future value. Which of the following is true about finding the present value of cash flows? Finding the present value of cash flows tells you how much you need to invest today so that it grows to a given future amount at a specified rate of return. Finding the present value of cash flows tells you what a cash flow will be worth in future years at a specified rate of return. Which of the following investments that pay will $18,500 in 8 years will have a higher price today? The security that earns an interest rate of 8.50%. The security that earns an interest rate of 12.75%. Eric wants to invest in government securities that promise to pay $1,000 at maturity. The opportunity cost (interest rate) of holding the security is 13.80%. Assuming that both investments have equal risk and Eric’s investment time horizon is flexible, which of the following investment options will…Preparing the statement of cash flows—direct method Use the Sweet Valley data from Problem P14-41B.< Requirements Prepare the 2018 statement of cash flows by the direct method. How will what you learned in this problem help you evaluate an investment?
- What is meant by an incremental cash flow? What do you need to ask yourself when deciding whether a cash flow is incremental or not? What types of incremental cash flows are there?4. Present value Finding a present value is the reverse of finding a future value. Which of the following is true about finding the present value of cash flows? -Finding the present value of cash flows tells you what a cash flow will be worth in future years at a specified rate of return. -Finding the present value of cash flows tells you how much you need to invest today so that it grows to a given future amount at a specified rate of return. Which of the following investments that pay will $18,000 in 4 years will have a lower price today? -The security earns an interest rate of 4.00%. -The security earns an interest rate of 6.00%.Assume that an investment is forecasted to produce the following cash flows: a 10% probability of $1475; a 50% probability of $2893; and a 40% probability of $3831. What is the expected amount of cash flow this investment will produce? Instruction: Type ONLY your numerical answer in the unit of dollars
- Please answer the following question. In this method, the company compares the amount spent on the investment with the discounted expected future cash inflows. a.Payback b.NRV c.Investment d.IRRPlease calculate investment in net working capital, net cash flows, and present value of net cash flows! Thank you!2. Future value The principal of the time value of money is probably the single most important concept in financial management. One of the most frequently encountered applications involves the calculation of a future value. The process for converting present values into future values is called . This process requires knowledge of the values of three of four time-value-of-money variables. Which of the following is not one of these variables? The interest rate (I) that could be earned by deposited funds The trend between the present and future values of an investment The duration of the deposit (N) The present value (PV) of the amount deposited All other things being equal, the numerical difference between a present and a future value corresponds to the amount of interest earned during the deposit or investment period. Each line on the following graph corresponds to an interest rate: 0%, 9%, or 17%. Identify the interest rate that corresponds…
