Blossom Telecommunications Corp. has made an investment in another company that will guarantee it a cash flow of $25,000 each year for the next five years. If the company uses a discount rate of 19 percent on its investments, what is the present value of this investment? (Round factor values to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25.)

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A: The Net Present Value can be calculated as follows:

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Q: ompound intere

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Q: what is the present value of this investment?

A: Present Value = C x [1 – [ (1 / 1 + r)^n] / r] Here, C = Cash Flow per period i.e. $21000 r =…

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A: Therefore, the NPV is -$37.41 million and PI is 0.37 times.

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.