Question

a) Suppose that an asset generates cash flows of $100, $200, and $300 at the end of years one, two, and three, respectively. If the discount rate is 10%, which of the following answers is the only one that can be correct? [Note: Show calculations to justify the answer chosen] a. The PV = $600, FV3 = $600. b. PV > $600, FV3 < $600. c. PV = $481.59, FV3 = $641.00.

Answer #1

Suppose that an asset generates cash flows of $100, $200, and
$300 at the end of years one, two, and three, respectively. If the
discount rate is 10%, which of the following answers is the only
one that can be correct? [Note: Show calculations to justify the
answer chosen]a. The PV = $600, FV3 = $600.b. PV > $600, FV3 < $600.c. PV = $481.59, FV3 = $641.00.

A project generates a cash flow of $497,400.00 per year (end of
year cash flows). If the project can last 15.00 more years, what is
its value TODAY of the remaining cash flows if the cost of capital
is 8.00%?
A real estate investment has the following expected cash
flows:
Year
Cash Flows
1
$13,600.00
2
$27,200.00
3
$44,000.00
4
$42,700.00
The discount rate is 10.00 percent. What is the investment's
future value at the end of the fourth year?

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?

Suppose a project costs $300 and produce cash flows of $100 over
each of the following six years. What is the IRR?

Given the following end-of-year cash flows, what is the implicit
discount rate if the PV is $2,020?
Year
Cash Flow
1
$500
2
$750
3
$1,000
Choose one of the following answers
4.50%
4.80%
5.00% This is correct but how do we know?
5.40%

A capital investment project requires an initial investment of
$100 and generates positive cash flows, $50 and $100, at the end of
the first and second years, respectively. (There is no cash flow
after the second year) The firm uses a hurdle rate of 15% for
projects of similar risk.
Determine whether you should accept or reject the project based
on NPV.
Determine whether you should accept or reject the project based
on IRR.
Determine whether you should accept or...

Suppose a project generates positive cash flows for the next 12
years and the project’s NPV is $110,000 when discount rate is 6%.
Also suppose that the IRR=8.7%. Which of the following may be a
possible value for NPV when discount rate is 7.4%?
A. -$25,000
B. 0
C. $25,000
D. $125,000
E. None of the above

An investment costs $465 and is expected to produce cash flows
of $100 at the end of each of the next 4 years, then an extra lump
sum payment of $200 at the end of the fourth year. What is the
expected rate of return on this investment?
Please show me how to work this problem on Excel. Thank you.

Assume that you have the following possible cash flows:
Years 1 and 2 CFs = $300;
Year 3 CF = $100;
Years 4 and 5 CFs = $200.
What is the value of the cash flows at today if the
required discount rate is 5%?
A.
556.45
B.
695.45
C.
569.45
D.
956.45
E.
965.45

Tomkat Corp. has only a single asset. This asset generates
operating cash flow of $200,000 per year, in perpetuity. Tomkat
also has a single liability, which is a perpetual bond (the
maturity date is infinitely far in the future) that has a face
value of $1 million and that pays coupon interest at a rate of 8%
once per year. The appropriate discount rate for all cash flows in
this problem is 10% per year. (a) What is the value...

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