Ransport Company has made an investment in another company that will guarantee it a cash flow of $37,250 each year for the next five years. If the company uses a discount rate of 15 percent on its investments, what is the present value of this investment?

Q: Using the tables provided, if an investment is made now for $19,200 that will generate a cash inflow…

A: Given, The investment is $19,200 Cash inflow is $6,400. Rate is 10%

Q: BRCC is evaluating an option for funding its working capital during the next year. The company plans…

A: in this we have to calculate the interest and add to that to get required value.

Q: The management of Amex Corp. plans to meet a future capital expenditure by depositing $25,000 into a…

A: The present value of the investment is the amount that one invest in the current period. The future…

Q: If $10,000 is invested in a certain business at the start of the year, the investor will receive…

A: Computation of present value:Hence, the present value is $1,151.30.

Q: A corporation is considering the purchase of an interest in real estate syndication at a price of…

A: Calculation of expected IRR compounded monthly, total cash paid and profit: Answer: Monthly required…

Q: GHA Co. made an investment of $10,000 and from this it will receive $800 annually for the next 18…

A: The present value of the annuity factor is used when there is an equal series of cash flows and the…

Q: Your company will generate $74,000 in annual revenue each year for the next seven years from a new…

A: Present Value = future value discounted at 7.25%

Q: Konerko, Inc., manageent expects  the company to earn cash flows of $13,227, $15,611, $18,970, and…

A: Given that;Expected earnings over next four years are $13,227, $15,611, $18,970, and $19,114…

Q: You recently invested $12,000 of your savings in a security issued by a large company. The secu-rity…

A: Given case is: You recently invested $12,000 of your savings in a security issued by a large…

Q: You buy a new piece of equipment for $16,230, and you receive a cash inflow of $2,500 per year for…

A: The internal rate of return (IRR) is the interest rate received for investment with payments and…

Q: The Dominion Freight Company has invested $50,000 in a new sorting machine that is expected to…

A: NPV is an abbreviation for Net Present Value. For example, NPV helps us to know the present value of…

Q: You buy a new piece of equipment for $11,778, and receive a cash inflow of $2,000 per year for 10…

A: Initial Investment is $11,778 Cash Inflow per year = $2,000 Time Period = 10 Years

Q: Downtown Partners is considering an investment of $500,000 in an early stage company, Newco.…

A: The required rate of return means the least profit an investor expects to collect from the…

Q: The TV company has made an investment in video and recording equipment that costs P106,700. The…

A: Average accounting rate of return = Average net profit / Average investment  0.10 = Average net…

Q: If Quail Company invests $50,000 today, it can expect to receive $10,000 at the end of each year for…

A: Net Present Value = Present value of cash inflows + Present value of salvage value - Initial…

Q: Suppose you have the opportunity to make an investment in a real estate venture that expects to pay…

A: Present value of annuity = P * {1-[1/(1+r)^n]/r} Where, P =Periodic Payment i.e. 750 r =rate of…

Q: The Dallas Development Corporation is considering the purchase of an apartment project for $100.000.…

A: Given information : Initial investment = $100,000 Estimated cash flows = $15,000 Tenure of project =…

Q: A firm can invest in one of the two investments. Both have three year horizons, and both have an…

A: Solution : Given Pre tax cash flow          = 100000 per year in both investments Discount rate   =…

Q: Sevim wants to create a savings of 95,000 TL at the end of 30 years. For this purpose, it plans to…

A: This question had two parts we had to find future value of both parts.

Q: Microsoft Co. places 150,000 in an investment that has a return of 8%.     The investment is placed…

A: given, PV = 150,000 r=8% n = 12 years withdrawal year = 6

Q: If Quail Company invests $46,000 today, it can expect to receive $12,000 at the end of each year for…

A: Net present value method is used to evaluate the investment projects. We can evaluate the project by…

Q: You are evaluating a growing perpetuity product from a large financial services firm. The product…

A: here is the formula for calculating the present value of growing perpetuity PV = A/(r-g) where…

Q: Scotia Bank Ltd. promises to pay 2.75% in the first year, 3.25% in the second year, 3.75% in the…

A: Interest Rates: Year Interest Rate 1 2.75% 2 3.25% 3 3.75% 4 4.00% Investment = 15,000…

Q: McDonald's major distribution partner, The Martin-Brower Company, needs at least $1 million to build…

A: Future Value of Ordinary Annuity refers to the concept which gives out the compounded or future…

Q: Your company plans to invest $20,000 at the end of each year or years 1 through 5, The company will…

A: Present Value: It represents the present worth of the future amount and is computed by multiplying…

Q: Suppose you have the opportunity to make an investment in a real estate venture that expects to pay…

A: The concept that helps to evaluate the future or present value of the cash flow is term as the time…

Q: You are evaluating a growing perpetuity product from a large financial services firm. The product…

A: The cash flows that are started immediately after the investment and go on for an infinite time…

Q: If the bank invested $75 million in a two-year asset paying 12 percent interest per year and…

A: Amount invested = $75 million Interest on investment = 12% for 2 years Amount issued = $60 million…

Q: Golf Ball Inc. expects earnings to be $10,000 per year in perpetuity if it pays out all of its…

A: Golf Ball Inc. expects its earnings to be $10,000 per year in perpetuity Payout Ratio = 100% The…

Q: An A&E firm planning for a future expansion deposited $44,000 each year for 5 years into a sinking…

A: Given information: Annual payment of $44,000 Number of years is 5 years, Future value of annuity is…

Q: A mining firm makes annual deposits of $400,000 into a reclamation fund for 25 years. If the firm…

A: Interest: It can be defined as a payment or a charge that is made by the borrower to a lender.

Q: A business worth $180,000 is expected to grow at 12% per year compounded annually for the next 4…

A:

Q: A company makes fixed annual payments to a sinking fund to replace equipment in five years’ time.…

A: Sinking fund is a fund which is established for the purpose of collecting an amount. This amount can…

Q: What is the rate of return on an investment of $10,606 if the company will receive $2,000 each year…

A: The rate of return on an investment is the ratio of profits earned on an investment made by the…

Q: The Dallas Development Corporation is considering the purchase of an apartment project for $100,000.…

A: Calculating IRR:  Internal rate of return is calculated to find out the discount rate that is…

Q: what rate of return did the company make on these deposits

A: A company uses a sinking fund investment account to avoid default in payment of the debt. A fixed…

Q: If you invest $15,000 in a long-term venture, you will receive $1,100 per year forever. The first…

A: In this we need to calculate the present value of all cost and benefits.

Q: A bank invested $50 million in a two-year asset paying 10 percent interest per year and…

A: Banks take deposits from customers and pay them lower interest rate or take money from investors or…

Q: Spero Industries has purchased new equipment that will provide an annual cash savings of $6,300 over…

A: Solution: Annual cash savings from new equipment = $6,300 Life of project = 7 years IRR of new…

Q: A company that manufactures digital pressure gauges just borrowed $10,000,000 with the understanding…

A: Annual payment (A)= $2,000,000 Number of years (n)= 4 Interest rate (i)= 8% per year How much will…

Q: If $10,000 is invested in a certain business at the start of the​ year, the investor will receive…

A: Basic Details: 1. Amount Invested = $10000 2. Annual Cash Flow = $3000 3. Term = 4 Years 4. Interest…

Q: Morgan Stanley's wealth management unit offers to invest profits of $750,000 made by an artist on a…

A: Time value of money-It is based on the concept that money earned today is worth more than similar…

Q: LMN Corporation has projected that their performance for the next five years will result to the…

A: Useful life is 10 years CAPEX is P1million Orginal purchase price is P5million Tax rate is 30%…

Q: How much would a business have to invest in a high-growth fund to receive $13,000 every month for 7…

A: An annuity is the total of regular payments made over a period of time at a specific date, at a…

Q: A firm, whose cost of capital is 8 percent, may acquire equipment for $146,825 and rent it to…

A: Given: Particulars Amount Cost of capital 8% Acquire equipment $146,825 Years 5 Rent…

Q: Eaglet Corporation has a 12 percent opportunity cost of funds and currently sells on terms of…

A: Credit terms refer to the payment time period offered to the customers at the time of sale of a…

Q: The restaurant chain company ESTIASI Limited is considering the case of investing in a new…

A: Net Present Value (NPV) is a capital budgeting technique that uses a discount rate to bring all the…

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.