Question

Assume a firm is evaluating a stream of cash flows. Today the firm incurs a cost of $10,000, and then the firm receives $2,559 in year 1, $2,881 in year 2, and $2,782 in year 3. Assume the firm has a discount rate of 12%. Calculate the present value of cash flows form year 1 to year 3.

Answer #1

The question is solved by computing the net present value of the cash flows.

Net present value is solved using a financial calculator. The steps to solve on the financial calculator:

- Press the CF button.
- CF0= -$10,000. It is entered with a negative sign since it is a cash outflow.
- Cash flow for all the years should be entered.
- Press Enter and down arrow after inputting each cash flow.
- After entering the last cash flow, press the NPV button and enter the discount rate of 12%.
- Press the down arrow and CPT buttons to get the net present value.

Present value of cash flows at 12% discount rate is
-**$3,438.29**

In case of any query, kindly comment on the solution.

Assume a firm is evaluating a stream of cash flows. Today the
firm incurs a cost of $10,000, and then the firm receives $1,826 in
year 1, $3,822 in year 2, and $1,456 in year 3. Assume the firm has
a discount rate of 14%. Calculate the present value of
cash flows form year 1 to year 3.

What is the present value of a perpetual stream of cash flows
that pays $1,500 at the end of year one and the annual cash flows
grow at a rate of 3% per year indefinitely, if the appropriate
discount rate is 14%? What if the appropriate discount rate is
12%?
A. If the appropriate discount rate is 14%, the present value
of the growing perpetuity is?
(Round to the nearest cent.)

You are evaluating a firm with projected free cash flows given
below. You expect that cash flows will grow by 4% per year after
the forecast period. The appropriate discount rate is 12%.
The firm has a net income of $34 million.
Debt of $20 million.
The firm has 10 million shares outstanding.
You have found a comparable firm with a P/E multiple of 11.5
times.
What is the price per share of the firm using FCF discounted by
weighted...

Calculate the present value of the given stream of cash flows
using the given discount rate. The present value you find is
between $24,000 and $24,100.
time
cash flows
discount rate
0
5%
1
$1,000
2
$1,500
3
$2,000
4
$2,500
5
$3,000
6
$3,500
7
$4,000
8
$4,500
9
$5,000
10
$5,500

What is the present value of a perpetual stream of cash flows that
pays $5,500 at the end of the year one and the annual cash flows
grow at a rate of 2% per year indefinitely, if the appropriate
discount rate is 13%? What if the appropriate discount rate is
11%?

What is the present value of a perpetual stream cash flows that
pays $4000 at the end of year one and the annual cash flows grow at
a rate of 2% per year indefinitely, if the appropriate discount
rate is 11%? What if the appropriate disscount rate is 9%?
A) If the appropriate discount rate is 11%, the present value of
the growing perpetuity is $_____? (Round to nearest cent)
B) If the appropriate discount rate is 9%, the present...

Problem 1
1.Startup cost: $10,000.
The cash flows for Years 1 through 5 are estimated to be $2500,
$4000, $5000, $3000, $1000.
Discount rate = 6%.
PV = C/(1+r)^t
NPV = Add all PVs and subtract investment
Problem 2
2. Startup costs in Year 0: $70,000.
The cash flows for Years 1 through 4 are estimated to be
$40,000
Discount rate = 12%.
Show Present Value for each year
Show Net Present Value after 4 years
as of today
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Year 1: $172
Year 2: $0
Year 3: $0
Year 4: $228

Consider the following cash flows and calculate the Present
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5%. Please include two decimals in your answer and a
negative if appropriate
Year 0: $113
Year 1: $-379
Year 2: $0
Year 3: $0
Year 4: $492

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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)?

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