Fundamentals of Financial Management (MindTap Course List)
14th Edition
ISBN: 9781285867977
Author: Eugene F. Brigham, Joel F. Houston
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 5, Problem 7P
Summary Introduction
To determine: The present value and the
Present Value: The present value refers to that value, which is the current value and by which the future value of the
Future Value: The future value means that value of the investment, which will be realized in the future. With the help of the calculation of future value, an analysis of the amount to be invested can be made. This is very useful for the financial users and investors.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
PRESENT AND FUTURE VALUES OF A CASH FLOW STREAM An investment will pay $150 atthe end of each of the next 3 years, $250 at the end of Year 4, $300 at the end of Year 5, and$500 at the end of Year 6. If other investments of equal risk earn 11% annually, what is itspresent value? Its future value?
PRESENT AND FUTURE VALUES OF A CASH FLOW STREAM
An investment will pay $100 at the end of each of the next 3 years, $200 at the end of Year 4, $350 at
the end of Year 5, and $500 at the end of Year 6.
a. If other investments of equal risk earn 8% annually, what is its present value? Round your answer to
the nearest cent.
b. If other investments of equal risk earn 8% annually, what is its future value? Round your answer to
the nearest cent.
A
Your investment will pay you the
following cash flow stream: YEAR |
CASH FLOW 1 |200 2 10 3 100 4 100
If your required rate of return is 12%,
what is the value (i. e., present value
) of this investment at time 0? What
is the future value at the end of year
7? Please explain in steps to input on
BA II Plus calculator
Chapter 5 Solutions
Fundamentals of Financial Management (MindTap Course List)
Ch. 5 - Prob. 1QCh. 5 - Explain whether the following statement is true or...Ch. 5 - If a firms earnings per share grew from 1 to 2...Ch. 5 - Prob. 4QCh. 5 - Prob. 5QCh. 5 - The present value of a perpetuity is equal to the...Ch. 5 - Banks and other lenders are required to disclose a...Ch. 5 - What is a loan amortization schedule, and what are...Ch. 5 - Prob. 1PCh. 5 - Prob. 2P
Ch. 5 - FINDING THE REQUIRED INTEREST RATE Your parents...Ch. 5 - TIME FOR A LUMP SUM TO DOUBLE If you deposit money...Ch. 5 - TIME TO REACH A FINANCIAL GOAL You have 42,180.53...Ch. 5 - Prob. 6PCh. 5 - Prob. 7PCh. 5 - LOAN AMORTIZATION AND EAR You want to buy a car....Ch. 5 - PRESENT AND FUTURE VALUES FOR DIFFERENT PERIOOS...Ch. 5 - Prob. 10PCh. 5 - GROWTH RATES Shalit Corporations 2014 sales were...Ch. 5 - EFFECTIVE RATE OF INTEREST Find the interest rates...Ch. 5 - Prob. 13PCh. 5 - FUTURE VALUE OF AN ANNUITY Find the future values...Ch. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - EFFECTIVE INTEREST RATE You borrow 85,000; the...Ch. 5 - Prob. 18PCh. 5 - FUTURE VALUE OF AN ANNUITY Your client is 40 years...Ch. 5 - Prob. 20PCh. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - FUTURE VALUE FOR VARIOUS COMPOUNDING PERIODS Find...Ch. 5 - Prob. 24PCh. 5 - FUTURE VALUE OF AN ANNUITY Kind the future values...Ch. 5 - PV AND LOAN ELIGIBILITY You have saved 4,000 for a...Ch. 5 - EFFECTIVE VERSUS NOMINAL INTEREST RATES Bank A...Ch. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - REQUIRED LUMP SUM PAYMENT Starting next year, you...Ch. 5 - Prob. 32PCh. 5 - FV OF UNEVEN CASH FLOW You want to buy a house...Ch. 5 - AMORTIZATION SCHEDULE a. Set up an amortization...Ch. 5 - Prob. 35PCh. 5 - NONANNUAL COMPOUNDING a. You plan to make five...Ch. 5 - Prob. 37PCh. 5 - Prob. 38PCh. 5 - REQUIRED ANNUITY PAYMENTS Your father is 50 years...Ch. 5 - Prob. 40PCh. 5 - Prob. 41SPCh. 5 - Prob. 42IC
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
- The cash flow profile for an investment is given below and the interest rate is 8% compounded annually.a. Find the present worth of this series using the actual cash flows. b. Find the future worth of this cash flow series using the actual cash flows. c. Find the future worth using the present worth. d. Find the worth of the series at EOY 4 using the individual cash flows. e. Find the present worth using the worth at EOY 4.arrow_forwardPresent worth of several incremental cash flows are shown in the graph for various interest rate values. Among project A, B, and C, with initial investments A < B < C, which one should be selected in the following cases? (1) When MARR = 4% (2) When MARR = 8%arrow_forwardWhat would be the interest rate that would allow you to convert an investment from B/.5,000 to B/.20,227.79 in 10 years? (NOTE: Do this problem ONLY with Conversion Factor and the corresponding Excel Financial Function and remember to confirm your answer with the corresponding Cash Flow Table)arrow_forward
- Hi can you help with this question please? An investment has the following cash flow profile. For each value of MARR below, what is the minimum value of X such that the investment is attractive based on an internal rate of return measure of merit? EOY 0 1 2 3 4 Cash Flow $(30,000.00) $ 6,000.00 $ 13,500.00 $X $ 13,500.00 MARR is 12 percent/yeararrow_forwardQuilts R Us (QRU) is considering an investment in a new patterning attachment with the cash flow profile shown in the table below. QRU’s MARR is 13.5%/year. Solve, a. What is the annual worth of this investment? b. What is the decision rule for judging the attractiveness of investments based on annual worth? c. Should QRU invest?arrow_forwardCalculate the duration for the following cash flows of an investment. Given the market interest rates are 10%. Year 1 2 3 4 7 8 Cash flow 140 150 160 170 180 190 200 250arrow_forward
- Wells Inc., has identified an investment project with the following cash flows. Year Cash flow 1 $970 2 $1200 3 $1420 4 $2160 a.) If the discount rate is 7 percent, what is the future value of these cash flows in year 4? a.) Future value at 7 percent_____ b.) What is the future value at an interest rate of 13 percent? b.) Future value at 13 percent_____ c.) What is the future value at an interst rate of 22 percent? c.) Future value at 22 percent_____arrow_forwardDraw a cash flow diagram of any investment that has both of the following properties: 1. The investment has a 4-year life. 2. The investment has a 10%/yr internal rate of return.arrow_forwardWhich of the following will generate the greatest future sum of money, assuming other variables stay constant? Select one: a. 5% yearly compound interest b. 10% yearly simple interest c. 10% yearly compound interest d. 5% yearly simple interestarrow_forward
- If you invest $8,800, what is your rate of return if you will receive the following cash flows at the end of these years: Yr. 1 $2,000; Yr. 2 $2,100; Yr. 3 $2,200; Yr. 4 $2,300; Yr. 5 $3,700?arrow_forwardWhat is the internal rate of return of an investment that requires a 10 percent minimum rate of return and has the following projected cash flows: Yr0 = -100, Yr1 = 25, Yr2 = 35, Yr3 = 45, Yr4 = 35, and Yr5 = 30? a. 19.33 percent b. 21.35 percent c. 20.05 percent d. 22.24 percentarrow_forward(Present value of complex cash flows) You have an opportunity to make an investment that will pay $100 at the end of the first year, $100 at the end of the second year, $300 at the end of the third year, $400 at the end of the fourth year, and $200 at the end of the fifth year. a. Find the present value if the interest rate is 11 percent. (Hint: You can simply bring each cash flow back to the present and then add them up. Another way to work this problem is to either use the =NPV function in Excel or to use your CF key on a financial calculator—but you'll want to check your calculator's manual before you use this key. Keep in mind that with the =NPV function in Excel, there is no initial outlay. That is, all this function does is bring all the future cash flows back to the present. With a financial calculator, you should keep in mind that CF0 is the initial outlay or cash flow at time 0, and, because there is no cash flow at time 0, CF0=0.) b. What would…arrow_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 Learning
Corporate 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