Suppose you receive cashflows of $10 at year 1, $12 at year 2, $14 at year 3 and $16 at year 4. What would be the value of the cashflows at year 2 at a 5% annual interest rate? MUST SHOW FULL WORK (NO EXCELL) a. 38.3458 b. 50.3458 c. 42.0000 d. 12.0000 e. 49.3621

Suppose you receive cashflows of $10 at year 1, $12 at year 2, $14 at year 3 and $16 at year 4. What would be the value of the cashflows at year 2 at a 5% annual interest rate? MUST SHOW FULL WORK (NO EXCELL) a. 38.3458 b. 50.3458 c. 42.0000 d. 12.0000 e. 49.3621

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 16EA: Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in...

See similar textbooks

Related questions

Q: On the basis of a future worth analysis at an interest rate of 12% per year, write the ANSWER f...

A: Future worth of a project can be defined as the future value of cash inflows and out flows of a proj...

Q: Anita opens a savings account. At the start of cach month she deposits SX into the savings account. ...

A: Interest rate (r) = 4.2% per annum = 0.35 % per month Money deposited at the start of the month = X ...

Q: 5. A merchant buys a particular product at P 20 per unit and sells them at P 35 per unit. His fixed ...

A: The selling price is the amount of money that a consumer pays to buy a product or a commodity. It is...

Q: Your employer, a midsized human resources management company, is considering expansion intorelated f...

A: The dividend discount model (DDM) is a mathematical method for predicting a company's stock price ba...

Q: Find the finance charges on an 8.4 percent, 18-month, $1,000, single-payment loan when interest is c...

A: Finance charge or interest is the fee paid to an investor or a fund provider for borrowing money. It...

Q: Compare the monthly payments and total loan costs for the following pairs of loan options. Assume th...

A: APR(Annual percentage rate) refers to annual cost paid by the borrower for the loan taken which incl...

Q: In a regression of the single-index model, the R-square is 68%, residual variance is 0.08, beta esti...

A: R square = 68% = 0.68 residual variance (σe^2)= 0.08 Beta (B) = 0.7 Let σm^2 = Market variance

Q: Q1 A company plans to borrow RM3,000,000 for a year. The stated interest rate is 10 percent. Compute...

A: Bartleby's Guideline Thanks for the Question “Since you have posted a question with multiple sub-par...

Q: How long will it take to quadruple your savings if you earn 4.5 percent interest, compounded annuall...

A: Interest Rate = 4.5% per annum To Find:- Number of years to quadruple your savings

Q: Ali Inc. expects to generate free-cash of $350000250000per year forever. If the firm's cost of capit...

A: The value of firm will be =free cash flow/cost of capital Market Value of common stock =value of fi...

Q: The spot rate of Japanese yen is $0.008, and the spot rate of peso is worth $0.590. How many peso do...

A: 1 Japanese yen = $0.008 1 Peso = $0.590

Q: Explain how the stock market operates, and list the distinctions between the different types of stoc...

A: Introduction to the stock market The stock market refers to the place where buyers and sellers meet ...

Q: ou are holding a portfolio of 100 shares of type I firms that are affected only by firm-specific ris...

A: The question is based on the concept of risk associated with portfolio investment. The risk of a por...

Q: n investor purchased a 182-day, $100,000.00 T-bill on its issue date for $98,634.24. After holding i...

A: Treasury Bill Treasury bills are short-term, debt obligations that are backed by the Treasury depart...

Q: Jersey Jewel Mining has a beta coefficient of 1.1. Currently the risk-free rate is 4 percent and the...

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only on...

Q: Computer Programmer $75/hour Architect $8,000 flat fee Attorney $250/hour Bankers 2% of capital rais...

A: Total cost of service will be equal to total of cost of computer programmer, cost of Architect, cost...

Q: A trader buys a European put on a share for K3. The stock price is K42 and the strike price is K40. ...

A: Put options: Put options give the buyer the right, but not the obligation to sell the underlying sec...

Q: oday, the U.S. and British interest rates as equally attractive to Swiss investors holding Swiss fra...

A: The exchange rate of currency depends on the interest rate of country against the interest rate of o...

Q: A futures price is currently 41 and has a volatility of 30%. The risk-free rate is 5%. The strike pr...

A: Given: Spot price = 41 Volatility = 30% Risk free rate = 5% Period = 9 months Strike price = 40

Q: lo find out the balance in your account just after you make deposit whereby you will deposit $400 at...

A: Future value of annuity can be found from the interest rate , period and annuity payment by finding ...

Q: If anl = 5 and s = 15, find the value of i.

A: Since you have asked multiple question, we will solve the first question for you. If you want any sp...

Q: A television can be bought on hire purchase with a deposit of $800 and 20 monthly installments of $2...

A: Hire Purchase: Hire purchase is a method of purchasing costly consumer items in which the customer m...

Q: How long will it take for your deposit to be P20, 000 if the account pays 12% annually?

A: Future Value: It represents the future worth of an investment cash flow and is computed by multiply...

Q: Kween Yazmine's mother borrowed Php35,000 to fix their car. The bank charges 5% interest for two yea...

A: Borrowed amount (PV) = Php 35,000 Interest rate (r) = 5% Period (n) = 2 Years

Q: 55. Amortization with Equal Payments Prepare an amortization schedule for a three-year loan of $57,0...

Q: Calculate the expected cost of investment and the standard deviation

A: The cost of investment can be defined as capital requirement for an investment. Expected cost f an i...

Q: Cleaner’s, Inc., is switching to paying employees every 2 weeks rather than weekly and will therefor...

A: In order to save outflow of cash, payroll system of employees are changed in respect of payment freq...

Q: With a Roth IRA, when can you withdraw your principal without having to pay taxes on the withdrawal?...

A: ROTH IRA gives the retired person the tax free income when they do retire. So it is very unique acco...

Q: Future Value with Multiple Cash Flows You plan to make a series of deposits in an interest-bearing a...

A: The future value of all the cash flows can be obtained by doing the sum of individual future value o...

Q: What is Bonds / Preference Shares and Ordinary Shares

A: Bond, preference shares and ordinary shares are the financial instrument issued for purpose of raisi...

Q: Cooperton Mining just announced it will cut its dividend from $3.79 to $2.44 per share and use the e...

A: Initial dividend (X) = $3.79 Initial growth rate (g1) = 3.1% New dividend (Y) = $2.44 New growth rat...

Q: What is LoGo's payables deferral period (DPO)?

A: Payables deferral period (DPO) = Accounts payable/Credit purchases per day It is the number of days ...

Q: 1. Planned Business 1: Upon initial collection of reliable data, a planned chocolate manufacturing b...

A: "Hi, Thanks for the Question. Since you asked multiple questions, we will answer first question for ...

Q: Varian wants to have $500,000 in an investment account six years from now. The account will pay 6.96...

A: Let "c "be monthly payments. Future value given = $ 500000 i = 6.96 ÷ 12 = 0.58% = 0.0058 Time = 6× ...

Q: Shares of stock that have been issued by the corporation at their par or issued value of the shares,...

A: The capital of a corporation is contributed by many number of persons and same is accounted in books...

Q: that you paid $11 million for rights to develop land with oil under the ground. It costs $5 million ...

A: Value of option is difference between the value today and value after one year. In this we have to d...

Q: On December 31, 2015, Martin Corp invested in Marlin’s 5-year, $200,000 bond with a 5% interest rate...

A: Market interest rate is the yield to maturity of the bond. It is the rate which the invetsors will g...

Q: A property worth $42,500 can be purchased for 5% down and semi-annual mortgage payments of $1975 for...

A: Mortgage amount (M) = 95% of $42500 = $40375 Semiannual payment (S) = $1975 n = 15 years = 30 paymen...

Q: Mariel owes P30,000 in 5 months with interest at 7% and another P14000 is due in 11 months with inte...

A: Data given: Mariel owes P30,000 in 5 months and P14000 is due in 11 months. New tenure = 9 month...

Q: The difference between European- and American-style of exercising currency options is that European-...

A: Options: These are the derivatives instruments or contracts whose value are from an underlying inves...

Q: The purchase of a used pickup truck for $9,000 is being considered. Fuel and maintenance $1,980 per ...

A: EUAC is the is equivalent uniform annual cost which is necessary to cover all cost involved in that...

Q: A reputable company plans to place an investment with a private equity firm with an amount of Php 10...

A: NPV is the difference between present value of cash inflows and initial investment. NPV =PV of all c...

Q: Overview The purpose of this discussion is to give you practice calculating and interpreting percent...

A: "Since you have asked multiple question we will be solving the first question for you,If you want an...

Q: You are considering a safe investment opportunity that requires a $780 investment today, and will p...

A: Investment (X) = $780 Payment after 2 years (P2) = $870 Payment after 5 years (P5) = $640 Let r = IR...

Q: Ms. Harake gave a Php100,000.00 to Ms. Gonzaga at 18%. How much was the interest after 45 days?

A: Simple interest is a method of calculating the proportion of interest paid on an amount over a certa...

Q: Discuss the importance of market efficiency, and explain why some markets are more efficient than ot...

A: Market efficiency is defined as the degree, where the market prices used to get reflected as per the...

Q: Giselle wants to withdraw $7500 at the beginning of every three months for 20 years starting day of ...

A: The given problem relates to retirement planning in which using the time value of money, we can firs...

Q: A short forward contract on an investment asset that yields 7.2% and was negotiated some time ago wi...

A: Given information, Delivery price (k) $68 Current spot (Fo) $48 Period (t) =10 months risk-free inte...

Q: Calculate CAPM for expected rate of return for the 3 company's in the chart Please show work For...

A: Calculation of the expected return using CAPM method: The formula of expected return (CAPM): FM com...

Q: A. You are offered an investment that will pay you $200 in one year, $400 the next year, $600 the ne...

A: The present value is today's value of future cash flows. It represents the discounted value of cash ...

Concept explainers

Mortgages

A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.

Mortgage

The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.

Question

38.3458

50.3458

42.0000

12.0000

49.3621

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

Assume that an investment of 100,000 produces a net cash flow of 60,000 per year for two years. The discount factor for year 1 is 0.89 and for year 2 is 0.80. The NPV is a. 0 b. 6,800 c. 1,400 d. (4,000)
You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.
An investment of 1,000 produces a net cash inflow of 500 in the first year and 750 in the second year. What is the payback period? a. 1.67 years b. 0.50 year c. 2.00 years d. 1.20 years e. Cannot be determined
Project Y cost $8,000 and will generate net cash inflows of $1,500 in year one, $2,000 in year two, $2,500 in year three, $3,000 in year four and $2,000 in year five. What is the NPV using 8% as the discount rate?
Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in year two, $2,000 in year three. $2,500 in year four, and $2,000 in year five. What is the NPV using 8% as the discount rate? For further instructions on net present value in Excel, see Appendix C.
You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? C. You invest $8,000 per year for 10 years at 12% interest, how much will you have at the end of 10 years? D. You win the lottery and can either receive $750,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why?
How much would you invest today in order to receive $30,000 in each of the following (for further Instructions on present value In Excel, see Appendix C): A. 10 years at 9% B. 8 years at 12% C. 14 years at 15% D. 19 years at 18%
If you invest $15,000 today, how much will you have in (for further instructions on future value in Excel, see Appendix C): A. 20 years at 22% B. 12 years at 10% C. 5 years at 14% D. 2 years at 7%
Refer to the present value table information on the previous page. What amount should Brett have in his bank account today, before withdrawal, if he needs 2,000 each year for 4 years, with the first withdrawal to be made today and each subsequent withdrawal at 1-year intervals? (Brett is to have exactly a zero balance in his bank account after the fourth withdrawal.) a. 2,000 + (2,000 0.926) + (2,000 0. 857) + (2,000 0.794) b. 2,0000.7354 c. (2,000 0.926) + (2,000 0.857) + (2,000 0.794) + (2,000 0.735) d. 2,0000.9264
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?
Refer to the present value table information on the previous page. If Kathleen put 3,000 in a savings account today, what amount of cash will be available 2 years from today? a. 3,000 0.857 b. 3,000 0.857 2 3,000 c. 4,000 0.681 0926 d. cannot be determined from the information given