Ch 11 Practice Questions solutions

Initial Outlay Cash Flow in Period CFo CF₁ CF2 -20,000 7,730.85 The IRR is approximately: O 18%. O 20%. O 16%. O 14%. 7,730.85 CF3 7,730.85 CF4 7,730.85

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* l 48% 2:55 pm Document (52) ment Time verue of Money -18 UNEVEN CASH FLOW STREAM Find the present values of the following cash flow streams at 8% compounded annually. a. 1 2 + $400 3 4 5 $0 $0 Stream A $100 $400 $400 $300 Stream B $300 $400 $400 $400 $100 b. What are the PVs of the streams at 0% compounded annually? S-19 FUTURE VALUE OF AN ANNUITY Your client is 40 years old; and she wants to begin saving for retirement, with the first payment to come one year from now. She can save $5,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average retum of 9% in the future. a. If she follows your advice, how much money will she have at 65? b. How much will she have at 70? c. She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. If her investments continue to eam the same rate, how much will she be able to withdraw at the end of each year aftor retirement at each retirement age?:ndows G

K- Consider the following timeline detailing a stream of cash flows: Date Cash flow 3 $100 $200 $300 $400 $500 ? 4 OA. $1,723 OB. $1500 OC. $2,757 OD. $2,068 If the current market rate of interest is 6%, then the future value (FV) of this stream of cash flows is closest to: GETTID

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Date 2 ? $100 $200 $300 Cash flow If the current market rate of interest is 11%, then the present value (PV) of this timeline as of year 0 is closest to: A. $614 B. $472 C. $944 D. $600

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What uniform series for 8 periods is equivalent to the following cash flows given i=5%? $250 $250 $100 $500 $150 $200 1|||1|| $100 $200 $200 $150 $200 012. -3- 4-5-6-7-8-9-10

A В E F 1 2 Current Year Prior Year Cash $7,440 $8,000 4 Accounts receivable 54,000 18,000 Equipment, net 44,000 40,000 91,680 $197,120 6. Land 66,000 $132,000 7 Total assets 8. Required: 10 Express the items in common-size percents. 9. 11 12 (Use cells A2 to C7 from the given information to complete this question.) 13 14 Current Year Prior Year 15 Cash 16 Accounts receivable 17 Equipment, net 18 Land 19 Total assets 20 21 22 23 Students: The scratchpad area is for you to do any additional work you need to solve this q 24 Nothing in this area will be graded, but it will be submitted with your assignment.

Shuttle Company issued $1,000,000, three-year, 10 percent bonds on January 1, year 1. The bond interest is paid each December 31, the end of the company's fiscal year. The bond was sold to yield 9 percent. Use Table 9C.1, Table 9C.2. (Round time value factor to 4 decimal places.) Required: 1. Complete a bond payment schedule. Use the effective-interest amortization method. (Make sure that the unamortized discount/premium equals to '0' and the Net Liability equals to face value of the bond in the last period. Interest expense in the last period should be calculated as Cash Interest (+) discount / (−) premium amortized. Round intermediate and final answers to the nearest whole dollar.) Date 1/1/year 1 12/31/year 1 12/31/year 2 12/31/year 3 Interest expense Bonds payable Interest payment Issuance of bonds Payment of bonds Bond Payment Schedule Interest Expense Cash Payment $ 100,000 100,000 100,000 Amortization of Premium 2. What amounts will be reported on the financial statements…

Pls help fast sir pls with explanation also

All is calculated i need only last EUAC calculation

ind the IRR for the following cash flows assuming a WACC of 10%.  YR CF 0 -15,000 1 6,000 2 4,000 3 2,000 4 3,000 5 2,000

Net Cash Flow - $12,000 $4,720 $5,570 $6,570 1) ΕΟΥ 3 Determine the IRR (to the nearest whole %) for the above cash flow profile.

Year Initial Cost & Carrying amount Annual net cash flows Annual net profit 0  $                            150,000.00     1  $                              70,000.00  $                 50,000.00  $        15,000.00 2  $                              42,000.00  $                 45,000.00  $        17,000.00 3  $                              21,000.00  $                 40,000.00  $        19,000.00 4  $                                7,000.00  $                 35,000.00  $        21,000.00 5  $                                           -    $                 30,000.00  $        23,000.00 1.  Terrys titles ltd is reviewing a capital investment proposal.The inital cost of the project and the net cash flows for every year presented in the schedule above. It is estimate that there would be no salvage value at the end of the investments life.Terry's uses a required rate of return of 10 per cent to evaluate new capital investment proposals.       a. Calculate the…

What is the IRR of the following set of cash flows? Year Cash Flow -$ 0 10,512 123 7,000 4,800 3,300 Multiple Choice 22.7% 25.09% 24.38% 23.9% 23.42%

What is the IRR of the following set of cash flows? Year 0 2 WN Cash Flow -$ 8,213 4,800 3,300 3,700 Multiple Choice O 20.71% 22.24% 21.36% 21.8% 22.89%

Net cash flow Present value at 20% Net present value (s thousands) Period 0 -13,100 1 2 3 4 5 6 7 -1,534 2,997 6,373 10,584 10,035 5,807 -13,100 -1,278 2,081 3,688 5,104 4,033 1,945 3,319 926 3,399 (sum of PVs) Restate the above net cash flows in real terms. Discount the restated cash flows at a real discount rate. Assume a 20% nominal rate and 10% expected inflation. NPV should be unchanged at +3,399, or $3,399,000. Note: Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers in thousands rounded to the nearest whole number. Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Real Net Cash Flows NPV $ (13,100)

Convert the cash flow shown in figure B to a future amount at t=7 when i=2%. O a. $1110 $370 $370 $370 O b.$1207.73 O. S1132 O d. $1500 $200 $100 1 2 3 4 $300

Year Cash Flow 0 −$8,200           1 2,500           2 4,100           3 3,900             What is the profitability index for the cash flows if the relevant discount rate is 10 percent? A. 1.079 B. 1.100 C. 0.995 D. 1.016 E. 1.048   What is the profitability index for the cash flows if the relevant discount rate is 16 percent? A. 0.939 B. 0.967 C. 0.986 D. 0.892 E. 0.911     What is the profitability index for the cash flows if the relevant discount rate is 26 percent? A. 0.795 B. 0.819 C. 0.834 D. 0.755 E. 0.771