Question

Different cash

flow.

Given the cash inflow in the following table,

LOADING...

, what is the present value of this cash flow at

5%,

13%,

and

24%

discount rates?

What is the present value of this cash flow at

5%

discount rate?

(Round to the nearest cent.)What is the present value of this cash flow at

13%

discount rate?

(Round to the nearest cent.)What is the present value of this cash flow at

24%

discount rate?

Present

value.

A smooth-talking used-car salesman who smiles considerably is offering you a great deal on a "pre-owned" car. He says, "For only

4

annual payments of

$2,700,

this beautiful 1998 Honda Civic can be yours." If you can borrow money at

8%,

what is the price of this car? Assume the payment is made at the end of each year.

If you can borrow money at

8%,

what is the price of this car?

Present

value.

A smooth-talking used-car salesman who smiles considerably is offering you a great deal on a "pre-owned" car. He says, "For only

4

annual payments of

$2,700,

this beautiful 1998 Honda Civic can be yours." If you can borrow money at

8%,

what is the price of this car? Assume the payment is made at the end of each year.

If you can borrow money at

8%,

what is the price of this car?

Answer #1

*First question is not answered since the cash flow
table is not made available.*

Second question:

Price of the car is the present value of annuity of $2,700 each (4 yearly payment)

Present value of annuity is calculated using the formula PVA= P*(1-(1+r)^-4)/r

Where

P= Periodical payments (given as $2,700,

n= Number of payments (given as 4) and

r= Rate of interest per period in decimals ( given as 8%)

Plugging the values,

Price of the car= 2700*(1-(1+0.08)^-4)/0.08

=2700* 3.312127 =
**$8,942.74**

Present
value.
A smooth-talking used-car salesman who smiles considerably is
offering you a great deal on a "pre-owned" car. He says, "For
only
4
annual payments of
$2,700,
this beautiful 1998 Honda Civic can be yours." If you can
borrow money at
8%,
what is the price of this car? Assume the payment is made at
the end of each year.
If you can borrow money at
8%,
what is the price of this car?
(Round to the nearest cent.)...

Different cash flow. Given the following cash inflow at the end
of each year, what is the future value of this cash flow at 4 %,
8 %, and 17% interest rates at the end of year 7? Year 1:
$12,000 Year 2: $22,000 Year 3: $30,000 Years 4 through 6:
$0 Year 7: $150,000
Future value. A speculator has purchased land along the southern
Oregon coast. He has taken a loan with the end-of-year payments of
$8,000 for 8...

Consider a project with the following cash flows:
Year 0: Cash flow = $500
Year 1: Cash flow = $0
Year 2: Cash flow = -$500
If the current market rate of interest is 8% per year,
compounded annually, what is the value of this stream of cash flows
expressed in terms of dollars at year 1? (Note: This
does not ask for the value as of year 0, but rather, as of year
1.)
a. $0
b. $250
c. $133...

given the following cash inflow at the end of each
year, what is the future value of this cash flow at 6%,8% and 15%
interest rates at the end of year
7.
year 1 $12,000. year 2.
$21,000. year 3. $30,000. years 4
through 6: $0. year
7. $150,000

What is the present value of the following cash flow stream at a
discount rate of 7%? $0 in year 0 $1,000 at the end of year 1
$2,500 at the end of year 2 $3,500 at the end of year 3 $4,250 at
the end of year 4 $2,500 at the end of year 5

What is the salvage cash flow for a piece of equipment given the
following information. The equipment had an initial book value of
$209,000. The asset was set up to be depreciated straight-line for
8 years to a book value of 0. The equipment can be sold today for
$62,000. Depreciation has been taken for 6 years. The firm's tax
rate is 31%. (Enter your answer with a decimal point.

Problem 8-9 Calculating NPV [LO 4]
Consider the following cash flows:
Year
Cash Flow
0
–$
33,000
1
14,400
2
17,300
3
11,800
What is the NPV at a discount rate of zero percent? (Do not
round intermediate calculations and round your answer to the
nearest whole number, e.g., 32.)
Net present value
$
What is the NPV at a discount rate of 12 percent? (Do not
round intermediate calculations and round your answer to 2 decimal...

DeBarry Corporation makes an investment of $50,000 that yields
the following cash flows:
Year Cash Flow
1 $10,000
2 10,000
3 16,000
4 18,000
5 20,000
a. What is the present value with a 9 percent discount rate
(cost of capital)? (Use a Financial calculator to arrive at the
answers. Round the final answer to the nearest whole dollar.)
Net present value $
b. What is the IRR? (Round the final answer to 2 decimal
places.)
IRR %
c. Would...

DeBarry Corporation makes an investment of $50,000 that yields
the following cash flows:
Year Cash Flow
1. $10,000
2 10,000
3. 16,000
4. 18,000
5 20,000
a. What is the present value with a 9 percent discount rate
(cost of capital)? (Use a Financial calculator to arrive at the
answers. Round the final answer to the nearest whole dollar.)
Net present value $ ?
b. What is the IRR? (Round the final answer to 2 decimal
places.)
IRR % ?...

Consider the following project’s cash
flows:
Year End-of-year Cash
Flow
–$1,000
-$2,000
$2,000
$1,500
A. What is this project’s net present value if the
discount rate is 6 percent?
B. What is this project’s internal rate of
return?
C. What is this project’s modified internal rate of
return if the reinvestment rate is 5 percent?
D. What is this project’s modified internal rate of
return if the reinvestment rate is 6 percent?

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