You have the following cash flows for the firm; What is NPV, if discount rate is 10% ? CF0 = -467 (CF0 is always negative. It is your initial investment) CF1 = 625 CF2 = 684 CF3 = 666 CF4 = 753 CF5 = 976

You have the following cash flows for the firm; What is NPV, if discount rate is 10% ? CF0 = -467 (CF0 is always negative. It is your initial investment) CF1 = 625 CF2 = 684 CF3 = 666 CF4 = 753 CF5 = 976

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 11P: Brook Corporation’s free cash flow for the current year (FCF0) was $3.00 million. Its investors...

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

You have the following cash flows for the firm;

What is NPV, if discount rate is 10% ?

CF₀ = -467 (CF₀ is always negative. It is your initial investment)

CF₁= 625

CF₂= 684

CF₃= 666

CF₄= 753

CF₅= 976

Definition Definition Calculation used to evaluate the investment and financing decisions that involve cash flows occurring over multiple periods. NPV is calculated as the difference between the present value of cash inflow and cash outflow. NPV is used for capital budgeting and investment planning as well as to compare similar investment alternatives.

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