The required rate of return, assuming no inflation is 8%. If the estimated cash flows are expressed in real terms, what discount rate should be applied to those cash flows to discover the net present value, assuming an inflation rate of 4% throughout the period of the project?
Q: If the discount rate is 10 percent, what is the present value of these cash flows? 3542.76
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2) The required
- A) 12.32%
- B) 12%
- C) 8%
- D) 4%
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- 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 a project with the following cash flows: End of Year (n) Cash Flows ($)0 -$22,4001 4,5002 12,6703 14,7804 13,6505 11,4406 7,800(a) At an interest rate of 18%, what is the discounted payback period?(b) What is the discounted payback period if the interest rate is 0%?3. The required rate of return, assuming no inflation, is 12%, the sales price of a particular product in a potential project is 6% pa and general inflation is forecast to be 8% pa for the foreseeable future. What rate should be used to discount nominal cashflows? A 18.00% B 18.72% C 20.00% D 20.96%
- Fuente, Inc., has identified an investment project with the following cash flows. Year Cash Flow 1 $ 1,075 2 1,210 3 1,340 4 1,420 a. If the discount rate is 8 percent, what is the future value of the cash flows in Year 4? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. If the discount rate is 11 percent, what is the future value of the cash flows in Year 4? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. If the discount rate is 24 percent, what is the future value of the cash flows in Year 4? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)Consider the following information relating to the expected cash flows from two independent projects. The cash flows are expressed in real terms, the nominal discount rate is 10% p.a. and the expected inflation rate is 4% p.a. Time 0 1 2 3 4 5 6 Project 1 -$200,000 $50,000 $50,000 $50,000 $50,000 $50,000 Project 2 -$250,000 $65,000 $65,000 $65,000 $65,000 $65,000 $65,000 a) Calculate the NPV of each of the projects b) In no more than 6 lines, explain which of the above projects you should select and why?Christie, Incorporated, has identified an investment project with the following cash flows. Year Cash Flow 1 $1,020 2 1,250 3 1,470 4 2,210 a. If the discount rate is 6 percent, what is the future value of these cash flows in Year 4? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. If the discount rate is 14 percent, what is the future value of these cash flows in Year 4? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. If the discount rate is 21 percent, what is the future value of these cash flows in Year 4? (Do not round intermediate calculations and round your answer to 2…
- A Project requires a current investment of $1,760.00 and yields future expected cash flows of $145.00, $267.00, $238.00, $355.00, $317.00, $357.00 and $307.00 in periods 1 through 7. For these expected cash flows, the appropriate discount rate is 7.5%. What is the Net Present Value of the Project?Consider the following information relating to the expected cash flows from two independent projects. The cash flows are expressed in real terms, the nominal discount rate is 10% p.a. and the expected inflation rate is 4% p.a. 1) Calculate the NPV of each of the projects 2). In no more than 6 lines, explain which of the above projects you should select and why?Consider the following project's after-tax cash flow and the expected annual general inflation rate during the project period: (a) Determine the average annual general inflation rate over the project period.(b) Convert the cash flows in actual dollars into equivalent constant dollarswith year 0 as the base year.(c) If the annual inflation-free interest rate is 5%, what is the present worth ofthe cash flow?
- Fox Co. has identified an investment project with the following cash flows. Year Cash Flow 1 S 1,090 2 940 3 1, 490 4 1,850 a. If the discount rate is 12 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the present value at 15 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.) c. What is the present value at 21 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)Consider the following project’s after-tax cashflow and the expected annual general inflation rateduring the project period.ExpectedEnd ofYearCash Flow(in Actual $)GeneralInflation Rate0 -$45,0001 32,000 3.5%2 32,000 4.23 32,000 5.5(a) Determine the average annual general inflationrate over the project period.(b) Convert the cash flows in actual dollars intoequivalent constant dollars with the base year 0.(c) If the annual inflation-free interest rate is 5%,what is the present worth of the cash flow? Isthis project acceptable?Mendez Company has identified an investment project with the following cash flows. Year Cash Flow 1 $770 2 1,030 3 1,290 4 1,400 a. If the discount rate is 10 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the present value at 17 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the present value at 25 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
