Essentials of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
9th Edition
ISBN: 9781259277214
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 5, Problem 27QP
Summary Introduction
To calculate: The
Introduction:
The present value of future cash flows that is discounted at a particular rate of discount is called as present value.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Assume the appropriate discount rate for the following cash flows is 10.3 percent.
Year
Cash Flow
1
$2,150
2,050
234
1,750
1,550
What is the present value of the cash flows? (Do not round intermediate calculations
and round your answer to 2 decimal places, e.g., 32.16.)
Present value
Assume the appropriate discount rate for the following cash flows is 10.2 percent.
Year
Cash Flow
1
$2,100
2
2,000
3
1,700
4
1,500
What is the present value of the cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
VALUATION METHOD: DISCOUNTED CASH FLOW METHOD
How much is the net present value of the Net Cash Flows, using discount rate of 10%?
Chapter 5 Solutions
Essentials of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Ch. 5.1 - Prob. 5.1ACQCh. 5.1 - Prob. 5.1BCQCh. 5.1 - Prob. 5.1CCQCh. 5.2 - In general, what is the present value of an...Ch. 5.2 - Prob. 5.2BCQCh. 5.3 - If an interest rate is given as 12 percent,...Ch. 5.3 - What is an APR? What is an EAR? Are they the same...Ch. 5.3 - In general, what is the relationship between a...Ch. 5.4 - What is a pure discount loan?Ch. 5.4 - What does it mean to amortize a loan?
Ch. 5 - Prob. 5.1CCh. 5 - Prob. 5.2CCh. 5 - Prob. 5.3CCh. 5 - Prob. 5.4CCh. 5 - Prob. 1CTCRCh. 5 - Prob. 2CTCRCh. 5 - Prob. 3CTCRCh. 5 - Annuity Present Values. Suppose you won the...Ch. 5 - Prob. 5CTCRCh. 5 - Prob. 6CTCRCh. 5 - Prob. 7CTCRCh. 5 - Time Value. On subsidized Stafford loans, a common...Ch. 5 - LO3 5.9Time Value. In words, how would you go...Ch. 5 - Time Value. Eligibility for a subsidized Stafford...Ch. 5 - Prob. 1QPCh. 5 - Present Value and Multiple Cash Flows. Investment...Ch. 5 - Future Value and Multiple Cash Flows. Booker,...Ch. 5 - Calculating Annuity Present Values. An investment...Ch. 5 - Calculating Annuity Cash Flows. For each of the...Ch. 5 - Calculating Annuity Values. For each of the...Ch. 5 - Prob. 7QPCh. 5 - Calculating Annuity Values. For each of the...Ch. 5 - Calculating Annuity Values. If you deposit 5,000...Ch. 5 - Prob. 10QPCh. 5 - Prob. 11QPCh. 5 - Calculating EAR. Find the EAR in each of the...Ch. 5 - Calculating APR. Find the APR, or stated rate, in...Ch. 5 - Calculating EAR. First National Bank charges 10.1...Ch. 5 - Prob. 15QPCh. 5 - Calculating Future Values. What is the future...Ch. 5 - Prob. 17QPCh. 5 - Calculating Present Values. An investment will pay...Ch. 5 - EAR versus APR. Ricky Ripovs Pawn Shop charges an...Ch. 5 - Calculating Loan Payments. You want to buy a new...Ch. 5 - Prob. 21QPCh. 5 - Prob. 22QPCh. 5 - Prob. 23QPCh. 5 - Calculating Annuity Future Values. You are to make...Ch. 5 - Calculating Annuity Future Values. In the previous...Ch. 5 - Calculating Annuity Present Values. Beginning...Ch. 5 - Prob. 27QPCh. 5 - Prob. 28QPCh. 5 - Simple Interest versus Compound Interest. First...Ch. 5 - Calculating Annuities Due. You want to buy a new...Ch. 5 - Calculating Interest Expense. You receive a credit...Ch. 5 - Calculating the Number of Periods. You are saving...Ch. 5 - Calculating Future Values. You have an investment...Ch. 5 - Prob. 34QPCh. 5 - Prob. 35QPCh. 5 - Calculating Present Value of Annuities. Peter...Ch. 5 - Prob. 37QPCh. 5 - Prob. 38QPCh. 5 - Calculating the Number of Payments. Youre prepared...Ch. 5 - Prob. 40QPCh. 5 - Prob. 41QPCh. 5 - Prob. 42QPCh. 5 - EAR versus APR. You have just purchased a new...Ch. 5 - Annuity Values. You are planning your retirement...Ch. 5 - Prob. 45QPCh. 5 - Prob. 46QPCh. 5 - Prob. 47QPCh. 5 - Calculating Present Values. A 6-year annuity of...Ch. 5 - Prob. 49QPCh. 5 - Prob. 50QPCh. 5 - Comparing Cash Flow Streams. You have your choice...Ch. 5 - LO1 52. Calculating Present Value of a Perpetuity....Ch. 5 - Calculating EAR. A local finance company quotes an...Ch. 5 - Prob. 54QPCh. 5 - Prob. 55QPCh. 5 - Amortization with Equal Principal Payments. Rework...Ch. 5 - Discount Interest Loans. This question illustrates...Ch. 5 - Prob. 58QPCh. 5 - Prob. 59QPCh. 5 - Prob. 60QPCh. 5 - Prob. 1CCCh. 5 - SS Airs Mortgage Mark Sexton and Todd Story, the...Ch. 5 - SS Airs Mortgage Mark Sexton and Todd Story, the...Ch. 5 - SS Airs Mortgage Mark Sexton and Todd Story, the...Ch. 5 - SS Airs Mortgage Mark Sexton and Todd Story, the...Ch. 5 - SS Airs Mortgage Mark Sexton and Todd Story, the...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Assume the appropriate discount rate for the following cash flows is 10.2 percent. Year Cash Flow 1234 2 3 $2,100 2,000 1,700 1,500 What is the present value of the cash flows? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Present valuearrow_forwardWhat is the Modified Internal Rate of Return of Mazgaon using the reivestment approach if the nterest rate is 7 percent? Year Cash Flows 0 −$27,400 1 10,750 2 21,900 3 9,960 4 −3,800arrow_forwardWhat is the present value of the following cash-flow stream if the interest rate is 4%? Year Cash Flow 1 $110 2 310 3 210arrow_forward
- The appropriate discount rate for the following cash flows is 9.32 percent per year. Year Cash Flow 1 $ 2,480 2 3,920 2,170 3 4 What is the present value of the cash flows? (Do not round intermediate calculations · and round your answer to 2 decimal places, e.g., 32.16.) Present valuearrow_forwardConsider the following cash flows: Year Cash Flow 0 -$ 29,500 1 14,200 2 3 14,700 11,100 a. What is the profitability index for the cash flows if the relevant discount rate is 10 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. b. What is the profitability index if the discount rate is 15 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. c. What is the profitability index if the discount rate is 22 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. a. Profitability index b. Profitability index c. Profitability indexarrow_forwardConsider the following cash flows: Year Cash Flow 0 -$ 28,900 1 14,800 2 3 14,100 10,500 a. What is the profitability index for the cash flows if the relevant discount rate is 8 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161 b. What is the profitability index if the discount rate is 13 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161 c. What is the profitability index if the discount rate is 20 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161 Answer is not complete. 0.181 × a. Profitability index b. Profitability index c. Profitability indexarrow_forward
- Year Cash Flow 0 (8,100.00) 1 3,600.00 2 3,900.00 3 2,800.00 a. What is the profitability index for the cash flows if the relevant discount rate is 9 percent? b. What is the profitability index for the cash flows if the relevant discount rate is 14 percent? c. What is the profitability index for the cash flows if the relevant discount rate is 24 percent?arrow_forwardConsider the following cash flows: Year Cash Flow 0 -$ 14,800 1 8,400 2 7,600 4,300 a. What is the profitability index for the above set of cash flows if the relevant discount rate is 10 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. b. What is the profitability index if the discount rate is 15 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. c. What is the profitability index if the discount rate is 22 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. a. Profitability index b. Profitability index c. Profitability indexarrow_forwardConsider the following cash flow: Year Cash Flow -$ 29,800 13,900 15,000 11,400 1 2 3 a). What is the profitability index for the cash flows if the relevant discount rate is 9 percent? b) what is the profitability index if the discount rate is 14 percent? c) What is the profitability index if the discount rate is 21 percent?arrow_forward
- What is the present value of the following set of cash flows at a 10% discount rate? Year Cash Flow OMR800 2 -OMR800 OMR800 4 -OMR800 3.arrow_forward1. Discounted Payback (DCPB) and IRR analysis. Use the cash flow situation (table below) to answer. a. Determine the DCPB based on a MARR rate of 8.0% b. Determine the IRR Year Cash Flow (in $1000's) 0 1 -5500 +1500 2 +1800 3 +1500 4 +1800 5 6 +1500 +1800 7 +1500arrow_forward4. What is the future value at year 3 of the following set of cash flows if the discount rate is 14%? Cash Flow Year 120 0 130 1 170 2 180 3 694 Formatarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
- Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage LearningCorporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education