Current Attempt in ProgressMarin Enterprises is using a discounted cash flow model. Identify which model Marin might use to estimate the discounted fair valueunder each scenario, and calculate the fair value using the present value tables:Scenario 1: Cash flows are fairly certain$110/year for 5 yearsRisk-adjusted discount rate is 5%Risk-free discount rate is 4%Scenario 2: Cash flows are uncertain75% probability that cash flows will be $110 in 5 years25% probability that cash flows will be $90 in 5 yearsRisk-adjusted discount rate is 5%Risk-free discount rate is 4%(For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round final answers to 2 decimal places, e.g. 5,275.25.)Click here to view the factor table PRESENT VALUE OF 1.Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.Scenario 1:Marin might usemodel. (For calculation purposes, use 5 decimal places as displayed inClick here to view the factor table PRESENT VALUE OF 1.Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.Scenario 1:Marin might useFair valueScenario 2:Marin might useFair value$69model.model.

There are primarily two approaches for estimating the fair value of the cash flows. Traditional…

Current Attempt in Progress Marin Enterprises is using a discounted cash flow model. Identify which model Marin might use to estimate the discounted fair value under each scenario, and calculate the fair value using the present value tables: Scenario 1: Cash flows are fairly certain $110/year for 5 years Risk-adjusted discount rate is 5% Risk-free discount rate is 4% Scenario 2: Cash flows are uncertain 75% probability that cash flows will be $110 in 5 years 25% probability that cash flows will be $90 in 5 years Risk-adjusted discount rate is 5% Risk-free discount rate is 4%

Current Attempt in Progress Marin Enterprises is using a discounted cash flow model. Identify which model Marin might use to estimate the discounted fair value under each scenario, and calculate the fair value using the present value tables: Scenario 1: Cash flows are fairly certain $110/year for 5 years Risk-adjusted discount rate is 5% Risk-free discount rate is 4% Scenario 2: Cash flows are uncertain 75% probability that cash flows will be $110 in 5 years 25% probability that cash flows will be $90 in 5 years Risk-adjusted discount rate is 5% Risk-free discount rate is 4%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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es McCann Co. has identified an investment project with the following cash flows. Year 1 234 a. If the discount rate is 10 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the present value at 16 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the present value at 25 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Cash Flow $820 1,130 1,390 1,525 b. C. Present value at 10% Present value at 16% Present value at 25%
Meriton Ltd expects cash flows of $13 000, $11 500, $12 750, and $9635 over the next 4 years. What is the present value of these cash flows if the appropriate discount rate is 8 per cent? A. $49990.81B. $2700.81C. $49099.81D. $39099.81
What is the present value of the following stream of cash flows if the discount rate is 9%? Year 1-5: $14,000 inflow Years 6-20: $23,000 inflow (Use the present value tables in your course packet for any present value calculations. Round your final answer to the nearest dollar.)
Quantitative Problem: You own a security with the cash flows shown below. 0 1 2 3 4 0 690 395 230 320 If you require an annual return of 12%, what is the present value of this cash flow stream? Do not round intermediate calculations. Round your answer to the nearest cent.
Skysong, Inc. is using a discounted cash flow model. Scenario 1: Cash flows are fairly certain $180/year for 5 years Risk-adjusted discount rate is 6% Risk-free discount rate is 4% Identify which model Skysong might use to estimate the discounted fair value under each scenario, and calculate the fair value. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round final answers to 2 decimal places, e.g. 5,275.25.) Click here to view the factor table PRESENT VALUE OF 1 Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Scenario 1. Skysong might use Fair Value Scenario 2: Skysong might use Fair Value $ Scenario 2: Cash flows are uncertain 75% probability that cash flows will be $180 in 5 years 25% probability that cash flows will be $95 in 5 years Risk-adjusted discount rate is 6% Risk-free discount rate is 4% $ traditional approach ✓ model. expected cash flow model.
Use the ERR method with = 10% per year to solve for a unique rate of return for the following cashflow diagram. How many IRRS (the maximum) are suggested by Descartes' rule of signs? The ERR is%. (Round to two decimal places.) A maximum of $45 IRR value(s) is(are) suggested by the Descartes' rule of signs. $220 $350 Enf of Year $190 Q MARR = 10%/yr
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The HUT is evaluating a 5 year investment projected to yield the following relevant cash flows over its 5 year life: Given that the firm employs a 12% discount rate, what is the value of each of the three criteria: NPV? Profitability Index? Payback Period? V
PRESENT AND FUTURE VALUES OF A CASH FLOW STREAM An investment will pay $150 at the end of each of the next 3 years, $250 at the end of Year 4, $350 at the end of Year 5, and $550 at the end of Year 6. a. If other investments of equal risk earn 10% annually, what is its present value? Round your answer to the nearest cent. $ b. If other investments of equal risk earn 10% annually, what is its future value? Round your answer to the nearest cent. $
(Present value of annuities and complex cash flows) You are given three investment alternatives to analyze. The cash flows from these three investments are as follows: @ End of Year 1 W 5 2 3 4 12 5 s damaged 30 6 X 7 8 3 a. What is the present value of investment A at an annual discount rate of 21 percent? $(Round to the nearest cent.) b. What is the present value of investment B at an annual discount rate of 21 percent? $(Round to the nearest cent.) c. What is the present value of investment C at an annual discount rate of 21 percent? (Round to the nearest cent.) 80 F3 E A $11,000 11,000 11,000 11,000 11,000 D C $ 4 DDD DOD F4 R Investment B F 1 $11,000 11,000 11,000 11,000 % 5 V is FS T G A 6 C $16,000 B 48,000 MacBook Air F6 Y & 7 H 44 F7 U N * CO 8 J DII FA 1 ( M 9 K MOSISO 19 O 1 0 V I 4 F10 11 P > command 4 ● FII + B = { [ I Next F12 .. ? option
Assuming a 1-year, money market account investment at 2.282.28 percent (APY), a 1.391.39 percent inflation rate, a 2525 percent marginal tax bracket, and a constant $50 comma 00050,000 balance, calculate the after-tax rate of return, the real rate of return, and the total monetary return. What are the implications of this result for cash management decisions? Question content area bottom Part 1 Assuming a 1-year, money market account investment at 2.282.28% (APY), a 2525% marginal tax bracket, and a constant $ 50 comma 000$50,000 balance, the after-tax rate of return is 1.711.71%. (Round to two decimal places.) Part 2 Assuming a 1-year, money market account investment at 2.282.28% (APY), a 2525% marginal tax bracket, and a constant $ 50 comma 000$50,000 balance, the after-tax monetary return is $855855. (Round to the nearest dollar.) Part 3 Given an after-tax return of 1.711.71% and an inflation rate of 1.391.39%, the after-tax real rate…
c. A company is planning to invest in a project over a 5-year period, but wants to know its financial implications. It expects the cash in-flow return on the investment to steadily increase over the 5 years. Using the information below, help determine the Total Net Cash Flows, the Net Present Value and the estimated Payback Period. Note: Estimate the payback period to the nearest year. Discount Rate 12% Investment Project Initial Investment Year 1 Year 2 Year 3 Year 4 Year 5 Cash Flow $ $ $ $ $ $ Total Net Cash Flow (5,000) 800 ? 900 ? 1,500 ? 1,800 ? 3,200 NPV of investment Estimated Payback Period

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