Question

Identify the steps involved in computing the future value when you have multiple cash flows. (please...

Identify the steps involved in computing the future value when you have multiple cash flows. (please give a new answer)

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Future Value refers to the Value of the cash flows at a given point of time in the Futue.

Step 1: When we have multiple cash flows available, to compute the future value, we must first identify the time period at which it is occuring and the time period in future for which we want to calculate the future value.

Step 2: If the Cash flows are consistent and occuring periodically, then we can apply the Future value annuity formulae and if the cash flows are not consistent then we have to calculate the future value of each flows.

Step 3: After calculating the future value of each flows then the sum of all these future values will be the future value.

Future Value Formulae : PV ( 1 +R)^ N

Where PV is Present Value, R is rate and N is total periods.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
When computing the present value of future cash flows, holding all other variables constant, a decrease...
When computing the present value of future cash flows, holding all other variables constant, a decrease in the discount rate: Multiple Choice Can’t be determined. will not change the present value of future cash flows. will increase the present value of future cash flows. is one method of compensating for reduced risk. will decrease the present value of future cash flows.
A- Future and Present Values of Multiple Cash Flows - Unless we are explicitly told otherwise,...
A- Future and Present Values of Multiple Cash Flows - Unless we are explicitly told otherwise, what do we always assume about the timing of cash flows in present and future value problems? B- Valuing Level Cash Flows: Annuities and Perpetuities - In general, what is the present value of an annuity of C dollars per period at a discount rate of r per period? The future value? C-Comparing Rates: The Effect of Compounding -If an interest rate is given...
Is this included when computing free cash flows for a project? Explain why it is or...
Is this included when computing free cash flows for a project? Explain why it is or isn't. Research and Development Costs
Is this included when computing free cash flows for a project? Explain why it is or...
Is this included when computing free cash flows for a project? Explain why it is or isn't. Cannibalization of the same firm's other sales
Is this included when computing free cash flows for a project? Explain why it is or...
Is this included when computing free cash flows for a project? Explain why it is or isn't. Changes in current asset/current liabilities accounts
You have to value a company based on its expected future cash flows. Interest rates are...
You have to value a company based on its expected future cash flows. Interest rates are currently 0.08. If this company expects income of $500 next year (at the end of year 0 or the beginning of the first year), growing at 0.02 each year until the end of the 10th year. Then, income growth is expected to slow to 0 forever-after. What is the value of this company today, in 1000s of dollars?
(a) What is the future value of the following unequal cash flows using 9% interest rate?...
(a) What is the future value of the following unequal cash flows using 9% interest rate? YEAR                  1                2                3                   4                5 CASH FLOW   $600         $800           $500            $400           $900 (b) What would be an annuity payment (PMT) that would give the same future value      using the same interest rate and same number of years? (c) What is the present value of the following unequal cash flows using       7.5% interest rate? YEAR                  1                2                3                   4               CASH FLOW   $950        ...
Question) The value of a financial security can be calculated as: Multiple choice answers) Please answer...
Question) The value of a financial security can be calculated as: Multiple choice answers) Please answer and Explain! a) the opportunity cost of owning another security. b) the sum of all income expected from a security. c) the present value of the security's expected cash flows. d) the future value of the income produced by the security.
Why do companies use a mid-year adjustment when discounting future free cash flows? What do you...
Why do companies use a mid-year adjustment when discounting future free cash flows? What do you do with “in the money” executive stock options when calculating the value of a company?
) The value of investment real estate A) Is based on the future cash flows the...
) The value of investment real estate A) Is based on the future cash flows the deal will generate B) Differs by individual investors due to differing hurdle rates amongst investors C) Is determined by financial analysis, then often ultimately decided upon by measuring the riskiness of future cash flows D) All the above
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT