Corporate Finance: A Focused Approach (mindtap Course List)
7th Edition
ISBN: 9781337909747
Author: Michael C. Ehrhardt, Eugene F. Brigham
Publisher: South-Western College Pub
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Question
Chapter 4, Problem 14P
a.
Summary Introduction
To Determine: The present value of cash flow stream.
b.
Summary Introduction
To Determine: The present value of cash flow stream if interest rate is 0%.
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Find the present values of the following cash flow streams. The appropriate interest rate is 6%. Round your answers to the nearest cent. (Hint: It is fairly easy to work this problem dealing with the individual cash flows. However, if you have a financial calculator, read the section of the manual that describes how to enter cash flows such as the ones in this problem. This will take a little time, but the investment will pay huge dividends throughout the course. Note that, when working with the calculator's cash flow register, you must enter CF0 = 0. Note also that it is quite easy to work the problem with Excel, using procedures described in the Chapter 4 Tool Kit.)
Year
Cash Stream A
Cash Stream B
1
$100
$300
2
400
400
3
400
400
4
400
400
5
300
100
Stream A $ $1,327.20
Stream B $ $1,366.43
What is the value of each cash flow stream at a 0% interest rate? Round your answers to the nearest cent.…
Find the present values of the following cash flow streams. The appropriate interest rate is 8%. (Hint: It is fairly easy to work this problem dealing with the individual cash flows. However, if you have a financial calculator, read the section of the manual that describes how to enter cash flows such as the ones in this problem. This will take a little time, but the investment will pay huge dividends throughout the course. Note that, when working with the calculator's cash flow register, you must enter CF0 = 0. Note also that it is quite easy to work the problem with Excel, using procedures described in the Ch04 Tool Kit.xlsx.) Do not round intermediate calculations. Round your answers to the nearest cent.
Year
Cash Stream A
Cash Stream B
1
$100
$250
2
400
400
3
400
400
4
400
400
5
250
100
Stream A: $
Stream B: $
What is the value of each cash flow stream at a 0% interest rate? Round your answers to the nearest dollar.
Find the present values of the following cash flow streams. The appropriate interest rate is 8%. (Hint: It is fairly easy to work this problem dealing with the individual cash flows. However, if you have a financial calculator, read the section of the manual that describes how to enter cash flows such as the ones in this problem. This will take a little time, but the investment will pay huge dividends throughout the course. Note that, when working with the calculator's cash flow register, you must enter CF0 = 0. Note also that it is quite easy to work the problem with Excel, using procedures described in the Ch04 Tool Kit.xlsx.) Do not round intermediate calculations. Round your answers to the nearest cent.
Year
Cash Stream A
Cash Stream B
1
$100
$200
2
400
400
3
400
400
4
400
400
5
200
100
Stream A: $
Stream B: $
What is the value of each cash flow stream at a 0% interest rate? Round your answers to the nearest dollar.
Stream A $
Stream B $
Chapter 4 Solutions
Corporate Finance: A Focused Approach (mindtap Course List)
Ch. 4 - Prob. 1QCh. 4 - Prob. 2QCh. 4 - An annuity is defined as a series of payments of a...Ch. 4 - If a firms earnings per share grew from 1 to 2...Ch. 4 - Prob. 5QCh. 4 - Prob. 1PCh. 4 - Prob. 2PCh. 4 - Prob. 3PCh. 4 - Prob. 4PCh. 4 - Prob. 5P
Ch. 4 - Prob. 6PCh. 4 - An investment will pay 100 at the end of each of...Ch. 4 - You want to buy a car, and a local bank will lend...Ch. 4 - Find the following values, using the equations,...Ch. 4 - Prob. 10PCh. 4 - Prob. 11PCh. 4 - Find the future value of the following annuities....Ch. 4 - Prob. 13PCh. 4 - Prob. 14PCh. 4 - Prob. 15PCh. 4 - Prob. 16PCh. 4 - Prob. 17PCh. 4 - Prob. 18PCh. 4 - Universal Bank pays 7% interest, compounded...Ch. 4 - Prob. 20PCh. 4 - Prob. 21PCh. 4 - Prob. 22PCh. 4 - A mortgage company offers to lend you 85,000; the...Ch. 4 - Prob. 24PCh. 4 - Prob. 25PCh. 4 - Prob. 26PCh. 4 - Prob. 27PCh. 4 - Prob. 28PCh. 4 - Prob. 29PCh. 4 - Your company is planning to borrow 1 million on a...Ch. 4 - It is now January 1. You plan to make a total of 5...Ch. 4 - Prob. 32PCh. 4 - Prob. 33PCh. 4 - You want to accumulate 1 million by your...Ch. 4 - Prob. 1MCCh. 4 - Prob. 2MCCh. 4 - Prob. 3MCCh. 4 - Prob. 4MCCh. 4 - Prob. 5MCCh. 4 - Prob. 6MCCh. 4 - Prob. 7MCCh. 4 - Prob. 8MCCh. 4 - Prob. 9MCCh. 4 - Prob. 10MCCh. 4 - Prob. 11MCCh. 4 - Prob. 12MCCh. 4 - Prob. 13MC
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- Solve the following and draw the cash flow diagram From the given cash flow diagram, find the future value of the geometric gradient with unknown constant rate f at i = 0.111 compounded annually -rate of increase should be rounded of by 5 decimal places and final answer to 2 decimal places -the value in the graph is 5000 and 9900 Note: Do not use excelarrow_forwardWhat would be the interest rate that would allow you to convert an investment from B/.5,000 to B/.20,227.79 in 10 years? (NOTE: Do this problem ONLY with Conversion Factor and the corresponding Excel Financial Function and remember to confirm your answer with the corresponding Cash Flow Table)arrow_forwardFind the value of the unknown quantity in the cash flow diagram to establish equivalence of cash inflows and outflows. Let i = 12% per year. Use a uniform gradient factor in your solution.arrow_forward
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- You have an opportunity to make an investment that will pay $200 at the end of the first year, $500 at the end of the second year, $500 at the end of the third year, $300 at the end of the fourth year, and $500 at the end of the fifth year. a. Find the present value if the interest rate is 12 percent. (Hint: You can simply bring each cash flow back to the present and then add them up. Another way to work this problem is to either use the =NPV function in Excel or to use your CF key on a financial calculator—but you'll want to check your calculator's manual before you use this key. Keep in mind that with the =NPV function in Excel, there is no initial outlay. That is, all this function does is bring all the future cash flows back to the present. With a financial calculator, you should keep in mind that CF0 is the initial outlay or cash flow at time 0, and, because there is no cash flow at time 0, CF0=0.) b. What would happen to the present value of this stream of…arrow_forwardChristie, 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…arrow_forwardCalculate the interest rate that gives a present value of 0 to the following cash flow diagram. Please show your work. Answer is 15.4%arrow_forward
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