Your consulting firm will produce cash flows of $190,000 this year, and you expect cash flows thereafter to keep pace with anyincrease in the general level of prices. The interest rate currently is 5.2%, and you anticipate inflation of about 1.2%.a. What is the present value of your firm's cash flows for years 1 through 5?Note: Do not round intermediate calculations. Round your answer to 2 decimal places.Present valueb. How would your answer to (a) change if you anticipated no growth in cash flow?Note: Do not round intermediate calculations. Round your answer to 2 decimal places.Present value

a. The present value of growing annuityCF1 = 190,000 * 1.012 = 192,280PV = $846,974.47 b. With no…

Answered: Your consulting firm will produce cash…

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter3: International Financial Markets

Section: Chapter Questions

Problem 3BIC

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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)
Hollywood Shoes would like to maintain their cash account at a minimum level of $67,000, but expect the standard deviation in net daily cash flows to be $5,700; the effective annual rate on marketable securities to be 6.50 percent per year; and the trading cost per sale or purchase of marketable securities to be $270 per transaction. What will be their optimal cash return point? (Round your answer to 2 decimal places.)
National Co. would like to maintain its cash account at a minimum level of P25,000, but expect the standard deviation in net daily cash flows to be P2,000; the effective annual rate on marketable securities to be 7.5% per year, and the trading cost per sale or purchase of marketable securities to be P200 per transaction. What will be their optimal cash return point?
Hollywood Shoes would like to maintain their cash account at a minimum level of $51,000, but expect the standard deviation in net daily cash flows to be $4,100; the effective annual rate on marketable securities to be 6.25 percent per year; and the trading cost per sale or purchase of marketable securities to be $110 per transaction. What will be their optimal upper cash limit? (Round your answer to the nearest dollar amount.) $55,100 $72,328.32 $111,859.83 $74,575.50
You will apply the concepts of company valuation that you have just learned to determine whether company XYZ is overvalued. We are currently at the end of the year "t". You performed a thorough financial analysis of XYZ and forecast the following Free Cash Flows (FCF): Year t+1: 352 million USDYear t+2: 385 million USDYear t+3: 407 million USDFrom year t+3 onward, you expect the FCFs to grow at a constant yearly rate of 4%. Through your analysis, you also determined that the appropriate Weighted Average Cost of Capital (WACC) for XYZ was 11%. Finally, you know that XYZ has 1000 million USD in debt and 100 million shares outstanding.
in this assignment, you will apply the concepts of company valuation that you have just learned to determine whether company XYZ is overvalued. We are currently at the end of year "t". You performed a thorough financial analysis of XYZ and forecast the following Free Cash Flows (FCF): Year t+1: 352 million USDYear t+2: 385 million USDYear t+3: 407 million USDFrom year t+3 onward, you expect the FCFs to grow at a constant yearly rate of 4%. Through your analysis, you also determined that the appropriate Weighted Average Cost of Capital (WACC) for XYZ was 11%. Finally, you know that XYZ has 1000 million USD in debt and 100 million shares outstanding.
Consider the following cash flow profile: Suppose the positive-valued cash flows are now replaced by a geometric series. If the cash flow at end of year 1 is $10,000, what geometric rate is required for the cash flow profiles to be equivalent? Interest is at a compounded annual rate of 6%.
Consider an EOY geometric gradient, which lasts for eight years, whose initial value at EOY one is $5,000 and f= 6% per year thereafter. Find the equivalent uniform gradient amount over the same period if the initial value of the cash flows at the end of year one is $4,000. Answer the following questions to determine the value of the gradient amount, G. The interest rate is 8% per year. Solve, a. What is P0 for the geometric gradient series? b. What is P0 of the uniform (arithmetic) gradient of cash flows? c. What is the value of G?
please help me answer it as fast as you can Your firm expects to receive a cash flow in two years of $1698 in nominal terms. If the real rate of interest is 2% and inflation rate is 9%, what is the real cash flow for year 2?
Given the cash flows in actual dollars provided in the following table, convert the cash flows to equivalent cash flows in constant dollars if the base year is time 0. Assume that the market interest rate is 16% and that the general inflation rate(f) is estimated at 4% per year. n Cash Flow (In Actual Dollars) 0 $20,5004 $41,5005 $36,5007 $55,500
Given the cash flows in actual dollars provided in the following table, convertthe cash flows to equivalent cash flows in constant dollars if the base year is time 0. Assume that the market interest rate is 16% and that the general inflation rate(/) is estimated at 4% per year. n Cash Flow 0 $20,500 4 $41,500 5 $36,500 7 $55,500
The company you work for is considering a new product line that is projected to have the net cash flows below (in $1000). The values are in future dollars which have been inflated by 5% per year. The plant manager isn’t sure about how the present worth of the cash flows should be calculated, so he asked you to do it two ways over the 4-year planning horizon: (1) using an inflation-adjusted rate of 20% per year, and (2) converting all of the cash flows to current-value dollars and using a real interest rate. You said both ways will provide the same answer, but he asked you to show him the calculations. Prepare the present worth computations by methods (1) and (2).

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