Suppose an investor is considering the purchase of a financial instru- ment that promises to deliver the following semiannual cash flows: four payments of $40 every six months for two years and $1,000 delivered four semiannual periods from now. Suppose the price of this financial instrument is $982.0624. What yield is being offered by this financial instrument? Please explain in detail.
Q: An investor have a projected surplus income of P1000 per year which he plans to place in a bank…
A: Periodic Payment = P 1,000 Interest Rate = 18% Time Period = 5 Years
Q: Determine the present value of a financial instrument that pays $18,500 in 10 years if instruments…
A: Present Value: It refers to the real value or worth of any asset or project. It determines the fair…
Q: National Co. would like to maintain its cash account at a minimum level of P25,000, but expect the…
A: Return Point = {3*Transaction cost* (Standard deviation )2 / (4 *i/365)} + Minimum Balance T =Fixed…
Q: A set of cash flows begins at $60,000 and increases at 10% per annum for the next 12 years. If the…
A: Begining Cash flow is $60,000 Cash flow growth rate is 10% per annum Time Period is 12 Years…
Q: A firm requires Rs. 20 million in cash for meeting its transaction needs over the next four months,…
A: Ordering costs and carrying costs are taken into consideration while determining Economic Order…
Q: Assume that you want to deposit an amount (BD120,000.00) into an account three years from now in…
A: Time Value of money: Money received today is worth more than money received later, according to the…
Q: Suppose you expect to receive the following future cash flows at the end of the years indicated.…
A: Future value- Year FV 2 $2300 4 $5200 5 $2600 9 $8000…
Q: Calculate the equivalent lump-sum(total) receipt now for the following cash flows: You invest $3,000…
A: Equivalent lump sum receipt: It is the equivalent value of the lump sum received at a different…
Q: Suppose you borrow $1,000 of principal that must be repaid at the end of two years, along with…
A: Real interest rate is referred as an adjustments of an observed market rate regarding an inflation…
Q: If you are calculating the present value of this cash flow under semiannual (twice per year)…
A: Future Value: It represents the value of annual cash flows or the sum of money at a later/future…
Q: ssume that the amount of initial investment is $350,000 and the scheduled receipts are $250,000 in…
A: Net Present Value is the difference between the present value of cash inflows and cash outflows.
Q: QI/ Ipswich Corporation is considering an investment opportunity with the expected net cash inflows…
A: Hi, there, Thanks for posting the question. As per our Q&A honour code, we must answer the first…
Q: A financial manager is considering two possible sources of funds necessary to finance a $10,000,000…
A: Term loan is a loan which is taken for a specific period. This period will vary for different firms.…
Q: A person is considering an investment situation that requires the investment of $150,000 at time…
A: Cash Flows: Year Cash Flow Reference 0 -150,000.00 Investment 1 -200,000.00 Investment 2…
Q: Consider the following two cash flow series of payments: Series A is a geometric series increasing…
A: Total amount paid should be equal to the cost. Value of X will be equal to the sum of PV of future…
Q: A proposed project which requires an investment of R10,000 (now) is expected to generate a series of…
A: Initial investment = R 10000 First payment (A) = R 6000 Growth rate (g) = 5% Interest rate (i) = 11%…
Q: What is the present value of the following cash-flow stream if the interest rate is 12%? You receive…
A: In the given question we require to calculate the present value of the stream of cashflows.
Q: Dosky expects to receive GHȼ300, GHȼ500, GHȼ1000 and GHȼ1500 in year1,2,3 and 4 respectively. What…
A: Cash flow Year 1 = 300 Cash flow Year 2 = 500 Cash flow Year 3 = 1000 Cash flow Year 4 = 1500…
Q: You have just received a windfall from an investment you made in a friend’s business. You will…
A: a) Present value = Future value / (1 + Rate)^Time Present value = $14,050/1.06 + $3,250/1.06^2 +…
Q: A firm expects to make payments of 1.1, 1.5, 1.2, 1.4 and 1.9 million for a particular supply over…
A: Solution:- Present value means the value in today’s terms after discounting the future cash flows to…
Q: ccaneer, Inc., has determined that it needs $10 million in cash per week. If Buccaneer needs…
A: Cash and its importance: Cash is the lifeline of a business, and all corporations aim to hold enough…
Q: What uniform annual series of cash flows over a 12-year period is equivalent to an investment of…
A: PVA=PMT 1+rn-1/r (1+r)n Present value annuityFVA=PMT1+rn-1/r Future value…
Q: You are valuing an investment that will pay you $26,000 per year for the first 9 years, $34,000 per…
A: For 1st Investment Investment = $26,000 Time Period = 9 Years For 2nd Investment Investment =…
Q: A report from the marketing department indicates that a new product will generate the following…
A: Discount rate is 11% To Find: Present Value
Q: A financial manager is considering two possible sources of funds necessary to finance a $10,000,000…
A: Formula: Projected earnings=EBIT-Interest-Tax
Q: QI/ Ipswich Corporation is considering an investment opportunity with the expected net cash inflows…
A: NPV is a technique of capital budgeting in which all outflows and inflows during the project’s life…
Q: Assume a company is going to make an investment of $300,000 in a machine and the following are the…
A: Capital budgeting is used to evaluate the different levels of investment projects. The organization…
Q: What constant annual payment is this equivalent to if the annual rate is 10%?
A: Equivalent Annual Payment: It computes the constant annual cash flow produced by a project over its…
Q: A financial manager is considering two possible sources of funds necessary to finance a $10,000,000…
A: Term loan is a loan which is taken for a specific period. This period will vary for different firms.…
Q: An investment offers to pay you $300 per quarter for 10 years. If the annual rate is 11% with…
A: given, quaterly payment N 10 x 4 = 40 I 11%4 PV find PMT $300 FV
Q: Hollywood Shoes would like to maintain their cash account at a minimum level of $67,000, but expect…
A: Given: cash account at a minimum level of $67,000 net daily cash flows to be $5,700 marketable…
Q: Green Corporation anticipates a cash requirement of P1,500 over a 1- month period. It is expected…
A: The question is based on the concept of Financial Management.
Q: Compute how much shall the investor collect at the end of 13 years
A: Future value: It is the future worth of the present amount or cashflows, compounded over a period…
Q: You are valuing a company using the WACC approach and have estimated that the free cash flows from…
A: WACC is 9% FCFF for next five year is $36.6, $40.1, $43.1 , $47.2 and $47.5 million. Cashflow…
Q: What is the present value of end-of-year cash flows of 1000 per year, with the first cash flow…
A: Present value is the sum of discounted future cashflow
Q: A similar application for investment yields can be made in cases where monthly cash annuities will…
A: PRESENT VALUE 51593 NPER (n) 240 PMT 400 FUTURE VALUE 0
Q: A firm, whose cost of capital is 8 percent, may acquire equipment for $146,825 and rent it to…
A: Given: Particulars Amount Cost of capital 8% Acquire equipment $146,825 Years 5 Rent…
Q: An amount of R50000 is invested in a project that predicts the quarterly cash flow return over the…
A: Internal Rate of Return(IRR) is rate at which NPV is zero or IRR is rate at which discounted value…
Q: Consider end-of-year cash flows for $8000, $15000, $22000, $29000, and $36000 for years 1 to 5. If…
A: Cashflows: Year 1 = $8,000 ;Year 2 = $15,000; Year 3 = $22,000 ; Year 4 = $29,000; Year 5 =…
Q: Suppose you expect to receive the following future cash flows at the end of the years indicated: GHC…
A: The present value of the cash flow is the current worth of a cash flow at a certain rate of interest…
Q: Consider an EOY geometric gradient, which lasts for eight years, whose initial value at EOY one is…
A: Calculation of p0 The value of P0 can be calculated by using the following formula P0=…
Q: present value
A: Present Value is the computed amount today of either a single sum amount or a series of payments to…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
- You are given the following information about an investment account for the year 2021: Value Immédiately Before Deposit 1060 1125 1200 1420 Date Deposit January 1 March 1 August 1 December 31 100 If the annual time-weighted yield rate for this account is 10%, compute the dollar- weighted yield rate, rounded to the nearest tenth of a percent.You are evaluating five different investments, all of which involve an upfront outlay of cash. Each investment will provide a single cash payment back to you in the future. Details of each investment appears here:. Calculate the IRR of each investment. State your answer to the nearest basis point (i.e., the nearest 1/100th of 1%, such as 3.76%). The yield for investment A is %. (Round to two decimal places.) Initial Future Investment Investment Value Im A $1,900 $4,029 B $9,600 $13,121 C $500 D $3,200 E $5,900 Data table $1,759 $4,139 $9,079 End of Year 11 9 18 3 12 I XHicks Company is considering an investment opportunity with the following expected net cash inflows: Year 1, $235,000; Year 2, $195,000; Year 3, $125,000. The company uses a discount rate of 6% and the initial investment is $365,000. LOADING... (Click the icon to view Present Value of $1 table.) LOADING... (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Calculate the NPV of the investment. Should the company invest in the project? Why or why not? Use the following table to calculate the net present value of the project. (Enter any factor amounts to three decimal places, X.XXX.) Net Cash PV Factor Present Years Inflow (i = 6%) Value Present value of each year's inflow: 1 (n = 1) 2 (n = 2) 3 (n = 3) Total PV of cash inflows…
- Suppose you expect to receive the following future cash flows at the end of the years indicated. $2300 in year 2, $5200 in year 4, $2600 in year 5, and $8000 in year 9. If the interest rate is 13% per year. What is the value of all the four flows at year 3?Consider each of the following deposit cash flow series. What will the final balance be (future equivalent value) after the final deposit? Assume the account earns 9% interest compounded annually *Use excel*What is the present value of the following cash-flow stream if the interest rate is 4%? Year 1: $170; 2: $370; 3:$270
- A financial planner at Faisal Bank has offered you three possible options for receiving cash flows. You must choose the option that has the highest present value. (Option 1) PKR 1,000 now and another PKR 1,000 at the beginning of each of the 11 subsequent months during the remainder of the year, to be deposited in an account paying a 12 percent nominal annual rate, but compounded monthly (to be left on deposit for the year). (Option 2) PKR 12,750 at the end of the year (assume a 12 percent nominal interest rate with semiannual compounding). (Option 3) A payment scheme of 8 quarterly payments made over the next two years. The first payment of PKR 800 is to be made at the end of the current quarter. Payments will increase by 20 percent each quarter. The money is to be deposited in an account paying a 12 percent nominal annual rate, but compounded quarterly (to be left on deposit for the entire 2-year period).Consider a future value of $2,000, 8 years in the future. Assume that the nominal interest rate is 18.00%. Assume that there is semiannual compounding. Entering PMT=0 and a FV=$2,000 into a financial calculator, along with the appropriate periodic interest rate and value of N, yields a present value of approximately $ with semiannual compounding. Assume that there is quarterly compounding. Entering PMT=0 and a FV=$2,000 into a financial calculator, along with the appropriate periodic interest rate and value of N, yields a present value of approximately $ with quarterly compounding. Suppose now that the cash flow of $2,000 occurs only 1 year in the future. Assume that there is monthly compounding. Entering PMT=0 and a FV=$2,000 into a financial calculator, along with the appropriate periodic interest rate and value of N, yields a present value of approximately $ with monthly compounding.Castle Company is considering an investment opportunity with the following expected net cash inflows: Year 1, $225,000; Year 2, $165,000; Year 3, $120,000. The company uses a discount rate of 9% and the initial investment is $325,000. F(Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Calculate the NPV of the investment. Should the company invest in the project? Why or why not? Use the following table to calculate the net present value of the project. (Enter any factor amounts to three decimal places, X.XXX.) Net Cash Inflow PV Factor (i = 9%) Years Year 1 Year 2 Year 3 Present value of each year's inflow: (n = 1) Present value of each year's inflow: (n=2) Present value of each year's inflow: (n = 3) Total PV of cash inflows Year 0 Initial investment Net present value of the project example Get more help. Present Value Reference Periods Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 Period 8…
- You will be receiving the following cashflows: $7,000 today, $4,000 in two years, and $10,000 in five years. If the appropriate discount rate is 5.5%, what is the present value of this cashflow stream? a. $12,623 O b. $18,245 O c. $23,387 O d. $21,052 O e. $15,408 O f. $15,783 g. $9,789 h. $17,739Suppose you receive cashflows of $10 at year 1, $12 at year 2, $14 at year 3 and $16 at year 4. What would be the value of the cashflows at year 2 at a 5% annual interest rate? MUST SHOW FULL WORK (NO EXCELL) a. 38.3458 b. 50.3458 c. 42.0000 d. 12.0000 e. 49.3621An investor is told that the following cash flow profile has a present value of $11,000 assuming that the money received at each time period is placed into an account where it earns 18% annually. For what value of X will this be true? Year Cash Flow Click here to access the TVM Factor Table calculator. $ 1 2 3 4 5 6 7 $1,300 $1,600 X X $3,000 $1,600 $400 Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is ±5.