Present and Future Values the present value of the following cash flow stream is $6,785 when discounted
Question:
Present and Future Values the present value of the following cash flow stream is $6,785 when discounted at 10 percent annually. What is the value of the missing cash flow?
Year Cash Flow
1 …………………… $1,500
2 ………………………… ?
3 …………………….. 1,800
4 …………………….. 2,400
Step by Step Answer:
We are given the total PV of all four cash flows If we f...View the full answer
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th Edition
Authors: Stephen A. Ross, Randolph W. Westerfield, Bradford D.Jordan
Related Video
The present value of future cash flows is calculated to determine the value today of a stream of future cash flows. It is calculated by discounting the future cash flows to their present value using a discount rate. The discount rate reflects the time value of money and the risk of the cash flows. It is important because it helps in making investment decisions, capital budgeting, loan decision making, and financial planning. By discounting future cash flows to their present value using a discount rate, it takes into account the time value of money and the risk associated with the cash flows. This allows investors, lenders, and financial planners to evaluate the viability of potential investments, projects, or loan applications, and to estimate the future value of investments or savings. calculating the present value of future cash flows is important in making investment decisions, capital budgeting, loan decision making, and financial planning. It helps to determine the viability of long-term projects, evaluate loan applications, and estimate the future value of investments or savings.
Students also viewed these Corporate Finance questions
-
The present value of the following cash flow stream is $6,200 when discounted at 9 percent annually. What is the value of the missing cash flow? Year.........................................Cash Flow...
-
The present value of the following cash flow stream is $6,550 when discounted at 10 percent annually. What is the value of the missing cash flow? Year_______Cash Flow 1..................$1,700...
-
The present value of the following cash flow stream is $7,300 when discounted at 7.1 percent annually. What is the value of the missing cash flow? Year ......................Cash Flow 1...
-
If you were the lead analyst for LGM, how would you determine the requirements? Be specific in your answer. List several questions you need answered. Artif. Intell. Med., 56 (3) pp. 137-156, Link:...
-
To tighten a spark plug, it is recommended that a torque of 15 N m be applied. If a mechanic tightens the spark plug with a wrench that is 25 cm long, what is the minimum force necessary to create...
-
Rates of return (annualized) in two investment portfolios are compared over the last 12 quarters. They are considered similar in safety, but portfolio B is advertised as being "less volatile." (a) At...
-
Oliver Scott has just made the final payment on his mortgage. He could continue to live in the home; cash expenses for repairs and maintenance (after any tax effects) would be $500 monthly....
-
Justification/Recommendation Report: Improving Register Efficiency at CircuitCentral CircuitCentral is a high-volume market-leading retailer of consumer electronics and appliances. It has established...
-
The following selected transactions are from Lee Company. 2016 Dec. 16 Accepted a $13,200, 60-day, 12% note dated this day in granting Juan Perez a time extension on his past-due account receivable....
-
Which statement is true when customers pay bills with a credit card? Question 1 options: a) You can use QuickBooks' Merchant Account Service to get online authorization and then download payments...
-
Calculating Loan Payments You need a 30-year, fixed-rate mortgage to buy a new home for $220,000, your mortgage bank will lend you the money at a 6.8 percent APR for this 360-month loan. However, you...
-
Calculating Present Values You just won the TVM Lottery. You will receive $1 million today plus another 10 annual payments that increase by $400,000 per year. Thus, in one year, you receive $1.4...
-
Empirical studies have established that the betas of conglomerate firms have been significantly above 1. What does this imply about diversification as a strong motive for conglomerate mergers?
-
Have a table that will show the equivalent effective interest rates to some nominal interest rates with various compounding rates. Put the nominal interest rates of 2%, 3%, 4%, 5%, 6%, 7%, 8%, 9%,...
-
What is a public order crime? How do public order crimes differ from other types of crime, as defined by the criminal justice system? How can we improve the ways in which the criminal justice system...
-
In the short run, with a rent ceiling in place, an increase in demand creates a shortage of housing units. Is the shortage remedied as time passes? Why or why not?
-
The following information relates to Preston Financial Services, anaccounting practice. The business specialises in providing accountingand taxation work for dentists and doctors. In the main the...
-
Design an algorithm to find both the largest and the smallest elements in a list with n elements such that at most 2n-3 comparisons are needed. You may assume that n is a power of 2. I (i) Determine...
-
a. Indicate the purpose of each of the three types of application controls, b. Identify the categories of controls pertaining to the conversion of data.
-
Sue Deliveau opened a software consulting firm that immediately paid $2,000 for a computer. Was this event a transaction for the business?
-
Cycle counting is: (a) Counting a statistically significant cross-section of your inventory frequently. (b) Counting everything in your facility at least twice per calendar or fiscal year. (c)...
-
Using the spreadsheet from Problem 10 and the fact that Cola Co. and Gas Co. have a correlation of 0.6083, calculate the volatility (standard deviation) of a portfolio that is 55% invested in Cola...
-
Using the spreadsheet from Problem 10 and the fact that Cola Co. and Gas Co. have a correlation of 0.6083, calculate the volatility (standard deviation) of a portfolio that is 55% invested in Cola...
-
Suppose Johnson & Johnson and the Walgreen Company have the expected returns and volatilities shown below, with a correlation of 22%. For a portfolio that is equally invested in Johnson & Johnsons...
-
Mia Breen Corp. produces and sells wind-energy-driven engines. To finance its operations, Mia Breen issued $358,000 of 25-year, 10% callable bonds on May 1, 20Y5, at their face amount, with interest...
-
Sports Hats, Etc. has two product lines-baseball helmets and football helmets. Income statement data for the most recent year follow: Total Baseball Helmets Football Helmets Sales revenue $460,000...
-
HDFS 3350 DJ Richards wondered if he had adequate life insurance for his family if he were to pass away. He decided to complete the Life Insurance Worksheet. His current yearly income is $38,400. He...
Study smarter with the SolutionInn App