Question

You will be receiving cash flows of: $2,000 today, $2,000 at the end of year 1, $3,000 at the end of year 3, and $6,000 at the end of year 5. What is the net present value of these cash flows at an interest rate of 4%?

Answer #1

Rate of interest = 4% or 0.04

Table showing net present value of cash inflows at different years where rate of interest is 4% or 0.04 -

Year | Cash Inflow | Interest rate | Future value interest factor | Net Present Value |

0 | $2,000 | 4% | 1.0000 | $2,000.00 |

1 | $2,000 | 4% | 1.0400 | $1,923.08 |

3 | $3,000 | 4% | 1.1249 | $2,666.90 |

5 | $6,000 | 4% | 1.2167 | $4,931.37 |

$11,521.35 |

Total net present value of cash infows is $11,521.35.

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?

1- If ABC company has FCF (free cash flows) of $2,000, $3,000,
and $4,000 at the end of years 1, 2, and 3. And the discount rate
is 20%. Assuming the present value (PV) of the firm is $9672.50.
What is its terminal value? and What is the present value of its
terminal value (TV)?
2- There are 200 barrels of oil that can be extracted from a
field and the price of doing it is $6,000. You presume
that the...

You own a contract that promises an annuity cash flow of $150
year-end cash flows for each of the next 3 years. (Note: The first
cash flow is exactly 1 year from today). At an interest rate of
11%, what is the present value of this contract?

8. Assume that you will receive $2,000 a year in Years 1 through
5, $3,000 a year in Years 6 through 8, and $2,000 in Year 9, with
all cash flows to be received at the end of the year. If you
require a 14 percent rate of return, then what is the present value
of these cash flows?
$ 9,851.49
$11,098.53
$11,713.72
$14,722.71
$17,353.88

Suppose you are looking at the following possible cash
flows:
Year 1 CF = $500;
Year 2 CF = $300;
Year 3 CF = $200;
Year 4 CF = $600;
The required discount rate is 5%.
What is the value of the cash flows today?
What is the value of the cash flows at the end of year 3?
What is the value of the cash flows at the end of year 5?

Question #13: You are presented with the following cash
flows:
• Year 1 – Cash flow of $150
• Year 2 and 3 – Cash flow of $325 each year
• Year 4 and 5 – Cash flow of $720 each year
Required: If the Required Rate of Return is 11%
a) What is the value of the Cash Flows at the end of Year 5?
b) What is the value of the Cash Flows today?

Assume a project will cost $10,000. Expected Cash Flows to be
received are $2,000 per year at end of years 1 & 2, then $4,000
per year at end of years 3 & 4 and $5,000 at the end of year 5.
No cash flows beyond year 5. Discount rate is 10%.
What is the NPV (value created)?

Seattle Corporation identifies an investment opportunity that
will yield end of year cash flows of $30,000 in both Year 1 and
Year 2, $35,000 in both Year 3 and Year 4, and $40,000 in Year 5.
The investment will cost the firm $85,000 today, and the firm's
required rate of return is 10 percent. What is the net present
value (NPV) for this investment?

An investor pays 100,000 today for a 4-year investment that
returns cash flows of 40,000 at the end of each of years 2, 3 and
4. The cash flows can be reinvested at 4% per annum effective.
If the rate of interest at which the investment is to be valued
is 5.0%, what is the net present value of this investment
today?
Let P denote the NPV of the investment today:
(a) P < 0
(b) 0≤P <700
(c) 700≤P...

You are given three investment alternatives to analyze. The cash
flows from these three investments are as follows:
End of Year A B C
1 $1,000 $1,000 $5,000
2 2,000 1,000 5,000
3 3,000 1,000 (5,000)
4 -4,000 1,000 (5,000)
5 4,000 3,000 15,000
What is the present value of each of these three investments if
the appropriate discount rate is 14 percent?
a. What is the present value of investment A at an annual
discount rate of 14percent?

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 5 minutes ago

asked 7 minutes ago

asked 34 minutes ago

asked 36 minutes ago

asked 50 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago