What is the present value of the following set of cash flows at an interest rate of 8% p.a. compounded annually? End of Year 1 $1,150 End of Year 2 $2,300 End of Year 3 $5,100 Select one: a. $7,401.20 b. $7,085.23 c. $8,550.00 d. $7,805.23

What is the present value of the following set of cash flows at an interest rate of 8% p.a. compounded annually? End of Year 1 $1,150 End of Year 2 $2,300 End of Year 3 $5,100 Select one: a. $7,401.20 b. $7,085.23 c. $8,550.00 d. $7,805.23

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 19E

See similar textbooks

Related questions

Q: What end of month payments are required over 4 years to pay off a $27,000 loan borrowed at 9.75%…

A: A loan is an agreement between two parties where an amount is forwarded with the promise to pay it…

Q: activity of investors in financial markets

A: The financial market refers to the place where people can trade financial securities and…

Q: Keith deposits 10,000 into a bank account at time 0. The bank credits interest at an annual nominal…

A: Given: Principal = 10,000 Interest rate annual = i% Semi-annual rate = i%/2 For simplicity let us…

Q: What is the future value four years from now of each of the following cash-flow streams if money can…

A: Future value is the worth of a certain deposit made today at a specific time in future.

Q: Consider the following table, which gives a security analyst's expected return on two stocks and the…

A: Answer - Part A - Calculation of betas of the two stocks : Beta A = Difference in Rate of Return…

Q: The board of directors of AMSB are confused between IRR and NPV. Briefly discuss the Internal Rate…

A: The internal rate of return method is a capital budgeting method which helps in finding out the rate…

Q: grow under each of the following conditions. Do not round intermediate calculations. Round your…

A: *Answer: Initial investment (I) = $350 Period = 5 years Interest rate = 6% or 0.06 Future…

Q: provided. After careful deliberation. Hope decides on a plan from Acadian Alliance Life Insurance…

A: Answer (a)

Q: 1. Which of the following is a source of cash flows? A) increase in marketable securities C)…

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

Q: 4 (a) Takaful provides Shariah compliant solutions to the prohibited concepts as in conventional…

A: Under Islamic finance there are rules and regulations to be followed based on the principles of…

Q: a stock index fund that had an average APR of 11% over the last year. estment in 5 years and advise…

A: Information Provided: Investment = $10,000 Years = 5 Safe rate = 1.5% compounded monthly Risky rate…

Q: You buy a stock for $65. The following year you sell it at again and receive a price that is $9…

Q: Determine the present value of an annuity for 15 years if the interest rate is 8.8% per annum…

A: An annuity is a constant stream of cash flows. In this case the cash flow amount is $72.50 in each…

Q: ABC bought a piece of land in a highly developing area for a purchase price of P4,000,000. Directly…

A: Purchase Price P 40,00,000.00 Cots Incurred Buying P…

Q: Compute the price of a 3.8% coupon bond with 18 years left to maturity and a market interest rate of…

A: Coupon rate = 0.038 (i.e. 3.8%) Annual coupon amount (C) = $38 (i.e. $1000 * 0.038) Maturity period…

Q: You win a lottery payout of $10,000 a year for the next 30 years. If your investment rate is 8…

A: Present Value: The present value is the present sum of a series of fixed payments. The series of…

Q: Emerald Enterprises is developing a new product at the cost of $ 50,000. The new product is expected…

A: Option b is correct i.e. 5 years. Refer calculation below.

Q: Suppose a business owner is trying to decide whether to invest in a new piece of machinery. The…

A: Since you have asked a question with multiple parts, we will solve first 3 parts as per policy.…

Q: Ex. 2 Calculate the combined default risk for company A and B from a combined bond issue of A and B:…

A: The company raises money by the issue of bonds but these bonds are subjected to risk of default and…

Q: Assume that the price of Swiss cheese increases by 50%. Andreas Tell, a maker of Swiss cheese in…

A: The opportunity cost refers to the amount of money that is forsaken when the investor chooses an…

Q: money supply M is 2,000, and the price level P is 2. If the price level is fixed an money is raised…

A: With change in money supply there will be change in interest rate and there may be increase in…

Q: Why is it that oftentimes banks refuse to lend to many borrowers even though they offer high…

A: Analysis of the given option: i) To reduce the exposure to diversification risk Remark-By…

Q: The government has two (2) plans to deal with their water supply problem in Zamboanga. Option 1 is…

A: Present value of includes the all cost that are going to occur during the use of equipment life…

Q: Year 1 2 3 4 5 Unit Sales 90,000 100,000 110,000 117,000 65,000 oduction of the trail mix will…

A: NPV It is a capital budgeting tool that helps to decide on whether the capital project should be…

Q: George took out a mortgage loan of $1 120 000 for 12 years at 4.55% p.a. compounding weekly. What is…

A: Mortgage loan = $1,120,000 Time Period = 12 Years Interest Rate = 4.55%

Q: CASE STUDY Mr. Ramon Kwong, a businessman, was looking into some business ventures wherein he could…

A: Data given: Description Venture A Venture B Revenue for account services 750000 1200000…

Q: very morning, Bob Smith puts his stock pick of the week up on Yahoo! Finance for the world to see.…

A: Stock market is like a mystery and nothing can be predicted easily and slight experience would tell…

Q: Find the annual financing cost

A: Annual Financing Cost = (interest cost +commitment fee) / usable funds * 365 / time period of…

Q: tempts Keep the Highest/2 . Inflation-induced tax distortions Felix receives a portion of his income…

A: Nominal interest rate is considering the impact of inflation and real interest rate is without…

Q: Earnings will Increase/Decrease

A: A cash flow statement refers to the statement that is helpful in tracking the cash movement in an…

Q: Calculate Paulson's WACC using market-value weights. Do not round intermediate calculations. Round…

A: WACC: It is the company's average cost of capital and is calculated by the total of all individual…

Q: What is the contribution margin per unit? 8.2 What is the contribution margin ratio? 8.3 If sales…

A: Information Provided: Sales = $48,000 Variable expenses = $32,000 Contribution margin = $16,000…

Q: An asset costs $420,000 and will be depreciated in a straight-line manner over its 3-year life. It…

A: Data given: Cost of asset = $ 420,000 Life= 3 years Salvage value = nil Corporate tax =32% Cost of…

Q: The CFO of a US corporation is considering borrowing £500 million British pounds at a cost of 4% per…

A: As per our guidelines we are supposed to answer only the first 3 sub-parts. For remaining parts,…

Q: ast is considered a comparable Company to AT&T. It has a P/E ratio of 12.78. Based on that alone,…

A: P/E ratio is used to compare the similar companies and we can judge that company is under valued or…

Q: lem 2: Value of Control: Intrinsic Valuation Acquirer Corporation would like to purchase the equity…

A: The value of shares can be found out from the constant growth of dividends by assuming that growth…

Q: How does HanaTour use the data it collects from the audit to increase the security of its data?

A: HanaTour : It is the largest travel company in Korea. The main business of HanaTour is providing…

Q: You determine in the marketplace that the average price for milk is R 14 per litre and that the…

A: The average price for milk = R 14 per litre Farmer gets = R 7 per litre Mark-up on cost = 20%

Q: "A furniture store has an ad for a sofa set priced at $1600. The customer is offered the choice of…

A: A loan is an agreement between two parties where one party forwards an amount for it to be paid back…

Q: Find the annual financing cost (AFC) or a 30 day line of credit where the bank requires a 10%…

A: *Answer: Data given: Loan amount =$214,296 Interest rate…

Q: What is the future value four years from now of each of the following cash-flow streams if money can…

A: Given: Particulars Years (NPER) 4 Interest rate (Rate) 5.25% Single amount(PV) $6,000…

Q: AYAYAI Ltd. had earnings per share of $5 as of December 31, 2022, but paid no dividends. Earnings…

A: As per the given information: Earnings per share as of December 31, 2022 - $5 Growth per year for…

Q: A mortgage for a condominium had a principal balance of $47,400 that had to be amortized over the…

A: Given: Particulars Amount Mortgage $47,400 Years 6 Interest rate 3.42% Monthly payment…

Q: Year CF 100 dividend is exp nosh flows are reinvested at 7%, what is the total wealth after 3.25…

A: Future values includes the amount that is deposited and what is amount of interest that is being…

Q: Tanya is considering an investment that will require an initial payment of 400,000 and additional…

A: Net present value is a discounted cash flow (DCF) method used for evaluating investment proposals.…

Q: An analyst gathered daily stock returns for February 1 through March 31, calculated the Fama-French…

A: The Fama French 3 factor model is an asset pricing model that calculates an investment's expected…

Q: Liability payments consists of 1000 at the end of 1 year, 2000 at the end of 2 years, and 3000 at…

A: Immunization: Immunization is a strategy that is used to mitigate the interest rate risk by ensuring…

Q: Part 2 On October 1, ET Inc. has available for issue a $324,000 bond due in eight years. Interest at…

A: Bond valuation (BV) refers to a method or technique which is used to compute the current value or…

Q: oduction of IFSA 2013, there are some changes in the takaful operation in Malaysia. Elaborate TWO…

A: There were some changes were made in 2013 through IFSA 2013 to make Islamic banking to be practical…

Q: If AT&T is expected to grow it's dividend by 1% per year after paying $1.11 next year and has a 6%…

A: As per dividend discount model, P0= D1/ (Ke - g), where, P0= Stock price D1= Dividend at the end of…

Question

What is the present value of the following set of cash flows at an interest rate of 8% p.a. compounded annually?

End of Year 1 $1,150

End of Year 2 $2,300

End of Year 3 $5,100

Select one:

$7,401.20

$7,085.23

$8,550.00

$7,805.23

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

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)
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
Brook Corporation’s free cash flow for the current year (FCF0) was $3.00 million. Its investors require a 13% rate of return on (WACC = 13%). What is the estimated value of operations if investors expect FCF to grow at a constant annual rate of (1) −5%, (2) 0%, (3) 5%, or (4) 10%?
What is the future value at the end of year three of the following set of cash flows at an interest rate of 10% p.a. compounded annually? End of Year 1 $5,100 End of Year 2 $2,300 End of Year 3 $1,150 Select one: a. $8,550 b. $9,966 c. $9,851 d. $9,581
Find the present equivalent worth for the annual cash flow series at an interest rate of 10% per year compounded quarterly n Net cash Flow 0 0 1 - 10 $400 11 - ∞ $500 pls draw cash flow diagram
Moving Cash Flows What is the value in year 7 of a $2,700 cash flow made in year 8 when interest rates are 11.8 percent?
For the cash flows shown, calculate the equivalent annual worth in years 1 through 4 at an interest rate of 10% per year. Year 0 1 2 3 4 Cash Flow, $ 250,000 275,000 300,000 325,000 375,000
Present and Future Values The present value of the following cash flow stream is $6,700 when discounted at 7.1 percent annually. What is the value of the missing cash flow? Year Cash Flow Years Cash flow 1 $1,40 2 ? 3 2,300 4 2,700
Bb. Find the present equivalent worth for the annual cash flow series at an interest rate of 10% per year compounded quarterly n Net cash Flow 0 0 1 - 10 $413 11 - ∞ $479
The present value of the following cash flow stream is$7,300 when discounted at 8 percent annually. What is the value of the missing cashflow? Year Cash Flow1 $1,5002 ?3 2,7004 2,900
What is the present value of the following cash flow stream at a rate of 8.0%? Years 0 1 2 3 4 Cash Flows ($) 750.00 2,450.00 2,450.00 - 4,000.00
In a geometric sequence of annual cash flows starting at the end of year zero, the value of A at e zero(Ao) is $1304.35( which is cash flow). The value of the last term in the series, A10 is $5276.82 what is equivalent value for A for year 1-10? Interest is 10%.