ces Exercise 12A-1 (Algo) Basic Present Value Concepts [LO12-7] Annual cash inflows that will arise from two competing investment projects are given below: Investment A Investment B $ 5,000 $ 8,000 6,000 7,000 7,000 6,000 8,000 5,000 $ 26,000 $ 26,000 Year 1 The discount rate is 13%. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Required: Compute the present value of the cash inflows for each investment. 1 2 3 2 3 4 Present Value of Year Cash Flows for Investment A 4 Present Value of Cash Flows for Investment B

Q: Explain CMO Mechanics?

A: Collateralized mortgage obligation: It is a financial instrument that raises funds by…

Q: How is ARR calculated?

A: ARR: Accounting Rate of Return (ARR) is the rate of return earned on the investment made in a…

Q: Define and expain

A: Detailed Explanation of Nursing1. Patient Care:Direct Care: Nurses provide hands-on care to…

Q: Define value chain.

A: Value Chain: Value Chain is the combination of activities including all the costs to do such…

Q: What are ADRs?

A: Answer: An American depositary receipt (ADR) is a negotiable asset that denotes a non-US company…

Q: Explain NAREIT Index?

A: NAREIT Index Rate: It implies the compound dividend yield which is communicated as far as a yearly…

Q: Define Volcker rule

A: Volcker Rule is a regulation that implies restrictions on the banks to involve in the stock market…

Q: What is MM Proposition I?

A: Modigliani and Miller’s approach is an element of economic theory and it forms the basis for modern…

Q: I need examples

A: Skimming fraud can be possible in business or personal basis. It is white collor crime. Generally It…

Q: Define TED spread

A: The term TED spread stands for Treasury Euro Dollar Spread. It can be defined as the credit…

Q: Define value drivers

A: Introduction: Value drivers are related to concept of free cash flow valuation model. This helps the…

Q: Define agent

A: Introduction: An agent is a party that has oral or written authority to perform for another…

Q: What is a CMO?

A: A collateralize mortgage obligation (CMO) refers to a type of mortgage-backed security that contains…

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.