An arithmetic cash flow gradient series equals $350 in year 1, $450 in year 2, and amounts increasing by $100 per year through year 12. At i = 11% per year, determine the present worth of the cash flow series in year 0. What is the present worth of the cash flow series in year 0?
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
An arithmetic cash flow gradient series equals $350 in year 1, $450 in year 2, and amounts increasing by $100 per year through year 12. At i = 11% per year, determine the present worth of the cash flow series in year 0.
What is the present worth of the cash flow series in year 0?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 3 images
