What is the present value of this stream of cash flows? Assume the cash flows occur at the end of each year and the annual cost of capital is 6%. Following year three, the cash flows will grow by 4% each year in perpetuity. Cost of capital Long-term growth 6% 4% Timeline 1 2 3 Cash flow $ 68.00 $ 60.00 $ 70.00 $ 73.00 PV(CF) Terminal value PV(Stream)

What is the present value of this stream of cash flows? Assume the cash flows occur at the end of each year and the annual cost of capital is 6%. Following year three, the cash flows will grow by 4% each year in perpetuity. Cost of capital Long-term growth 6% 4% Timeline 1 2 3 Cash flow $ 68.00 $ 60.00 $ 70.00 $ 73.00 PV(CF) Terminal value PV(Stream)

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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Similar questions

The investment shown in the following figure has an annual equivalent worthof $200 at i = 8%. Determine the cash flows in periods 2, 3, 5 and 6.
Please provide correct answer
Consider an uneven cash flow stream: Year Cash Flow 0 $2,000 1 $2,000 2 $0 3 $1,500 4 $2,500 5 $4,000 What is the present (Year 0) value of the cash flow stream if the opportunity cost rate is 10 percent? What is the value of the cash flow stream at the end of Year 5 if the cash flows are invested in an account that pays 10 percent annually? What cash flow today (Year 0), in lieu of the $2,000 cash flow, would be needed to accumulate $20,000 at the end of Year 5? (Assume that the cash flows for Years 1 through 5 remain the same.)
At a rate of 9.5%, what is the future value of the following cash flow stream? Years: CFS: 0 $0 1 $80 2 $240 3 $0 4 $320
ASAP Assume that investing $ 1,000 entitles you to a ten-year cash flow thatyields $ 100 the following year and grows at an annual rate of 3% since then (Xk = 100 (1.03)k-1 , k = 1,. . . , 10). A) Determine the present values of cash flow for nominal interest rates of 1%, 2%. B) what is internal rate of return on cash flow?
Economics suppose that we have cash flows as follows: End of Year Cash Flows($) 1 8,000 2 7,000 3 6,000 4 5,000 Calculate the annual equivalent value at the end of each year at i=17% per year?
Year Cash Flow (A) Cash Flow (B) 0 −$ 417,000 −$ 36,000 1 48,000 19,600 2 58,000 14,100 3 75,000 14,600 4 532,000 11,400 The required return on these investments is 13 percent. What is the payback period for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. What is the NPV for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. What is the IRR for each project? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. What is the profitability index for each project? Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161. Based on your answers in (a) through (d), which project will you finally choose?
Year Cash Inflow1 14,0002 19,0003 31,0004 05 06 07 130,000 what is the future value of this cash flow at 3%, 11%, and 18% interest rates at the end of year 7
what is the present value of a series of $6000 end of the year cash flowsto be received forever if the required rate of return is 5% per year and the first cash flow is one year from today? a)$8333.33 b)300 c)120000 d)12000
The table below gives the expected cash inflows of a firm for a period of 9 years. Time 3 6 9 Cash inflow (£) 45000 90000 120000 Assume the present value of the cash outflows is £87000, and the applicable cost of capital is 13%. Calculate the (a) Future value of the cash inflows (b) Modified internal rate of return (MIRR)
Please provide correct solution
Consider the following cash flow diagram. What value of C makes the inflow series equivalent to the outflow series at an interest rate of 10% compounded annually?

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