Compare the calculated present values

Assignment Help Financial Management
Reference no: EM131848217

Consider the streams of income given in the following table:

Income Stream

End of Year A B

1 $9,000 $6,000

2 $8,000 $7,000

3 $7,000 $8,000

4 $6,000 $9,000

Total $30,000 $30,000

a. Find the present value of each income stream, using a discount rate of 1 %, then repeat those calculations using a discount rate of 9%

b. Compare the calculated present values and discuss them in light of the fact that the undiscounted total income amounts to $30,000 in each case.

Reference no: EM131848217

Questions Cloud

Advantages and disadvantages of using the big mac index : What are the advantages and disadvantages of using the “Big Mac Index” in The Economist magazine to determine purchasing power parity (PPP)?
Sell stocks in an attempt to beat the market : What are the implications of the efficient market hypothesis for investors who buy and sell stocks in an attempt to "beat the market'?
Fundamental principle-take two portfolios : Fundamental Principle: Take two portfolios, A and B. If value of portfolio A can be guaranteed to be greater than or equal to value of portfolio B at time T
Four basic tax planning variables impacts after-tax value : Which of the four basic tax planning variables (entity, character, time period, jurisdiction) impacts after-tax value.
Compare the calculated present values : Compare the calculated present values and discuss them in light of the fact that the undiscounted total income amounts to $30,000 in each case.
Which of the two interest rates is better measure of return : Which of the two interest rates is a better measure of return for someone who holds the bond until its maturity? Explain why?
What was the coupon payment on this bond : What was the coupon payment on this bond? Is the yield to maturity on this bond greater or less than current yield? Why? Explain
What is the change in the price-weighted index of stocks : What is the change in the price-weighted index of stocks A and B from Wednsday to Thursday?
Compound annual rate of growth between the earliest year : Estimate the compound annual rate of growth between the earliest year for which a value is given and 2017.

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd