Present value of dividends: Fresno Corp. is a fast-growing company whose management expects it to grow at a rate of 30 percent o
1 answer:
You might be interested in
Answer:
If CF0 is positive and all the other CFs are negative, then you can still solve for I
TRUE. This will be the formula for ordinary annuity.
This is the case of a loan on which the company receives a positive cash flow at the beginning and then makes subsequent cash payments, thus negatives cash flows.
Explanation:
If you have a series of cash flows, and CF0 is negative but each of the following CFs is positive, you can solve for I, but only if the sum of the undiscounted cash flows exceeds the cost
FALSE If the sum is below the cost then it will give a negative rate
To solve for I, one must identify the value of I that causes the PV of the positive CFs to equal the absolute value of the FV of the negative CFs. FALSE you can't compare a present value with a future as they are on different dates.
It is impossible to find the value of I without a computer or financial calculator.
FALSE There are method of approximation the difference is that the computer does this faster than humans.
If you solve for I and get a negative number, then you must have made a mistake
FALSE if the project return are lower than cost the rate will be negative.