Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Concept explainers

Present Value
Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. …
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cash price wi00. Find the present value of the given future amount: $57,000 for 8 months at 10% simple interest (yearly). N101. What is the present value of $6,000 to be received at the end of 6 years if the discount rate is 12%? vol 102. Sardor has been offered an investment that will pay him $500 three years from today. If his opportunity cost is 7% compounded annually, what value should he place on this opportunity today? 103. A company has cost of debt of 6% and cost of equity of 15%. In this country, the corporate income tax rate is 20%. If the debt to equity ratio is 0.5, what is the WACC? 104. A company has cost of debt of 6% and cost of equity of 15%. In this country, the corporate income tax rate is 20%. If the company's debt to total capital ratio is 60%, what is the WACC?
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Transcribed Image Text:cash price wi00. Find the present value of the given future amount: $57,000 for 8 months at 10% simple interest (yearly). N101. What is the present value of $6,000 to be received at the end of 6 years if the discount rate is 12%? vol 102. Sardor has been offered an investment that will pay him $500 three years from today. If his opportunity cost is 7% compounded annually, what value should he place on this opportunity today? 103. A company has cost of debt of 6% and cost of equity of 15%. In this country, the corporate income tax rate is 20%. If the debt to equity ratio is 0.5, what is the WACC? 104. A company has cost of debt of 6% and cost of equity of 15%. In this country, the corporate income tax rate is 20%. If the company's debt to total capital ratio is 60%, what is the WACC?
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