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8_murik_8 [283]
3 years ago
12

g You will be receiving cash flows of: $2,000 today, $3,000 at end of year 1, $5,000 at end of year 3, and $7,000 at end of year

5. What is the present value of these cash flows at an interest rate of 10%?
Business
2 answers:
MaRussiya [10]3 years ago
6 0

Answer:

$12 830.29

Explanation:

The future cash flows are discounted at the  interest rate to get present value

Year 0 =$2000

Year 1 = $3000

Year 3 = $5000

Year 5 = $7000

r = 10%

PV of cash flows = 2000+3000/(1.1)^1+5000/(1.1)^3+7000/(1.1)^5

                             =2000+2727.27+3756.57+4346.45

                              =$12830.29

     

enot [183]3 years ago
5 0

Answer:

The present value of the cashflows will be $12830.30

Explanation:

The present value of the cashflows can be calculated by dividing the cash flows by the appropriate discount rate and for the appropriate time period.

The present value of the given cash flows will be,

Present Value = CF1 / (1+r) + CF2 / (1+r)^2 + .... + CFn / (1+r)^n

As the first payment is received today, it will already be in the present value so it will not be discounted.

Present value = 2000 + 3000 /  (1+0.1) + 5000 / (1+0.1)^3 + 7000 / (1+0.1)^5

Present value = $12830.295 rounded off to $12830.30

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5 0
3 years ago
Legal ownership in one country does not necessarily mean ownership in other countries
Nonamiya [84]
The statement above is TRUE.
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7 0
3 years ago
Another term for "food poisoning" is?
disa [49]

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botulism. salmonella.

Explanation:

7 0
3 years ago
Read 2 more answers
Avery Corporation's target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is
Andreyy89

Answer:

8.15%

Explanation:

The computation of the weighted average cost of capital as follows;

= After Cost of debt × weightage of debt + cost of preferred stock × weight of preferred stock + cost of common equity × weight of equity

= 6.50% × (1 - 0.40) × 35 ÷ 100 + 6% × 10 ÷ 100 + 11.25% × 55 ÷ 100

= 1.37% + 0.60% + 6.19%

= 8.15%

8 0
3 years ago
A company is planning to move to a larger office and is trying to decide if the new office should be owned or leased. Cash flows
skad [1K]

Answer:  13.26%

Explanation:

Year 0 Investment = $385,000

Incremental Cash flow every year = Cashflow if owned - Cashflow if leased

= 164,000 - 133,000

= $31,500

Incremental cashflow in Year 10 = Incremental Cashflow + Cashflow from sale of property

= 31,500 + 750,000

= $781,500

Using Excel and the IRR function, the rate is = 13.26%

5 0
4 years ago
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