PRINCIPLES OF CORPORATE FINANCE
13th Edition
ISBN: 9781264052059
Author: BREALEY
Publisher: MCG
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Question
Chapter 2, Problem 28PS
a.
Summary Introduction
To determine: The present value at the end of each year.
a.
Expert Solution
Answer to Problem 28PS
The present value at the end of each year is $12.50 billion.
Explanation of Solution
Determine the present value at the end of each year
Therefore the present value at the end of each year is $12.50 billion.
b.
Summary Introduction
To determine: The present value at the end of first year if the growth rate is 4%.
b.
Expert Solution
Answer to Problem 28PS
The present value at the end of first year if the growth rate is 4% is $25 billion.
Explanation of Solution
Determine the present value at the end of first year if the growth rate is 4%
Therefore the present value at the end of first year if the growth rate is 4% is $25 billion.
c.
Summary Introduction
To determine: The present value at the end of 20 years.
c.
Expert Solution
Answer to Problem 28PS
The present value at the end of 20 years is $9.82 billion.
Explanation of Solution
Determine the present value at the end of 20 years
Excel Spreadsheet:
Therefore the present value at the end of 20 years is $9.82 billion.
d.
Summary Introduction
To determine: The present value if spread evenly for 20 years.
d.
Expert Solution
Answer to Problem 28PS
The present value if spread evenly for 20 years is $10.20 billion.
Explanation of Solution
Determine the continuous compounded rate
Therefore the continuous compounded rate is 7.70%.
Determine the present value if spread evenly for 20 years
Therefore the present value if spread evenly for 20 years is $10.20 billion.
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Chapter 2 Solutions
PRINCIPLES OF CORPORATE FINANCE
Ch. 2 - (FV) In 1880, five aboriginal trackers were each...Ch. 2 - Prob. 2SQCh. 2 - (PV) Your company can lease a truck for 10,000 a...Ch. 2 - (RATE) Ford Motor stock was one of the victims of...Ch. 2 - Prob. 5SQCh. 2 - Prob. 6SQCh. 2 - Prob. 7SQCh. 2 - (NOMINAL) What monthly compounded interest rate...Ch. 2 - Opportunity cost of capital Which of the following...Ch. 2 - Opportunity cost of capital Explain why we refer...
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