Your consulting firm will produce cash flows of $145,000 this year, and you expect cash flows thereafter to keep pace with any ncrease in the general level of prices. The interest rate currently is 6.9%, and you anticipate inflation of about 2.9%. a. What is the present value of your firm's cash flows for years 1 through 5? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Present value $ Present value 279,013.75 b. How would your answer to (a) change if you anticipated no growth in cash flow? Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Your consulting firm will produce cash flows of $145,000 this year, and you expect cash flows thereafter to keep pace with any ncrease in the general level of prices. The interest rate currently is 6.9%, and you anticipate inflation of about 2.9%. a. What is the present value of your firm's cash flows for years 1 through 5? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Present value $ Present value 279,013.75 b. How would your answer to (a) change if you anticipated no growth in cash flow? Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 12MC: (1) What is the value at the end of Year 3 of the following cash flow stream if the quoted interest...
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![Your consulting firm will produce cash flows of $145,000 this year, and you expect cash flows thereafter to keep pace with any
increase in the general level of prices. The interest rate currently is 6.9%, and you anticipate inflation of about 2.9%.
a. What is the present value of your firm's cash flows for years 1 through 5?
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Present value
$
Present value
279,013.75
b. How would your answer to (a) change if you anticipated no growth in cash flow?
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4e725b02-9d54-4901-858b-ae8285fb0c7e%2Fb516178d-2ba2-41b0-ad86-5df3ad89315c%2Fjdhebob_processed.png&w=3840&q=75)
Transcribed Image Text:Your consulting firm will produce cash flows of $145,000 this year, and you expect cash flows thereafter to keep pace with any
increase in the general level of prices. The interest rate currently is 6.9%, and you anticipate inflation of about 2.9%.
a. What is the present value of your firm's cash flows for years 1 through 5?
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Present value
$
Present value
279,013.75
b. How would your answer to (a) change if you anticipated no growth in cash flow?
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
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