=6) Find the internal rates of return on a cash flow with deposit amounts of A=A₁=240, B₁120, A₂=20, B₂=290, and withdrawal amounts of Boat times t = 0, t = 1, t = 2, respectively.=40,10,

The internal rate of return method is used to find the profitability of a project by calculating if…

Find the internal rates of return on a cash flow with deposit amounts of Ao = 40, 10, = A₁ = 120, A₂ = 290, and withdrawal amounts of Bo = 240, B₁ = 20, B₂ at times t = 0, t = 1, t = 2, respectively.

Find the internal rates of return on a cash flow with deposit amounts of Ao = 40, 10, = A₁ = 120, A₂ = 290, and withdrawal amounts of Bo = 240, B₁ = 20, B₂ at times t = 0, t = 1, t = 2, respectively.

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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A fixed stream of cash flows occurring at the beginning of each period for a fixed period of time is known as: Select one: a. Ordinary annuity b. Constant annuity c. Annuity due d. Financial annuity
The NPV function automatically discounts each of the cash flows and sums the discounted values. Verify that it does this correctly for Acron’s model by calculating the NPV the long way. That is, discount each cash flow and then sum these discounted values. Use Excel formulas to do this, but don’t use the NPV function. (Hint: Remember that the discounted value of $1received t years from now is 1y(1 1 r)t dollars today.)
The present value represents the amount of money you would have to deposit today in order to match what you would get from the income stream at the future date. The formula is Time = M = i Future value represents the total amount of money you would have if you deposit the income stream until a future date. The formula is To start our problem we need to identify the variables. Rate =r= i Income Stream S(t) = i Present Value = years % M 1. 0 S (t) et dt. Future Value = Present Value* erM dollars/year
For the intrinsic value, why is the cashflow divided by (10%-6%)?
Can I get some help with this practice question
Consider two assets with the following cash flow streams: Asset A generates $4 at t=1, $3 at t=2, and $10 at t=3. Asset B generates $2 at t=1, $X at t=2, and $10 at t=3. Suppose X=6 and the interest rate r is constant. For r=0.1, calculate the present value of the two assets. Determine the set of all interest rates {r} such that asset A is more valuable than asset Draw the present value of the assets as a function of the interest rate. Suppose r=0.2. Find the value X such that the present value of asset B is 12. Suppose the (one-period) interest rates are variable and given as follows: r01=0.1,r12=0.2, r23=0.3. Calculate the yield to maturity of asset A. (You can use Excel or ascientific calculator to find the solution numerically.)
Direction: Define, draw the cash flow diagram, and write the general formula of the following: ANNUITY 1. Ordinary Annuity a) Sum/Future of Ordinary Annuity b) Present Worth of Ordinary Annuity 2. Annuity Due 3. Deferred Annuity
Consider the calculation of an external rate of return (ERR). The positive cash flows in the cash flow profile are moved forward to t = n using what value of i in the (F|P,i,n–t) factors? a. 0 b. The unknown value of ERR (i′) c. MARR d. IRR.
How do you take the present value of a stream of cash flows. How does it work for annual payments, weekly payments, quarterly payments, and monthly payments? Provide examples of each
Present and Future Values of Single Cash Flows for Different Interest Rates Use both the TVM equations and a financial calculator to find the following values. (Hint: If you are using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can "override" the variable that changes by simply entering a new value for it and then pressing the key for the unknown variable to obtain the second answer. This procedure can be used in parts b and d, and in many other situations, to see how changes in input variables affect the output variable.) Do not round intermediate calculations. Round your answers to the nearest cent. An initial $700 compounded for 10 years at 6%. $ An initial $700 compounded for 10 years at 12%. $ The present value of $700 due in 10 years at a 6% discount rate. $ The present value of $700 due in 10 years at a 12% discount rate. $
Present and Future Values of Single Cash Flows for Different Interest Rates Use both the TVM equations and a financial calculator to find the following values. (Hint: If you are using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can "override" the variable that changes by simply entering a new value for it and then pressing the key for the unknown variable to obtain the second answer. This procedure can be used in parts b and d, and in many other situations, to see how changes in input variables affect the output variable.) Do not round intermediate calculations. Round your answers to the nearest cent. An initial $700 compounded for 10 years at 3%. $ An initial $700 compounded for 10 years at 6%. $ The present value of $700 due in 10 years at a 3% discount rate. $ The present value of $700 due in 10 years at a 6% discount rate. $
The rate of return that equates the present value of cash inflows and outflows is the: A. hurdle rate.B. desired rate of return.C. internal rate of return. D. minimum rate of return.

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