Determine the present value of the mixed stream

Assignment Help Finance Basics

Reference no: EM131111518

Using the information in the accompanying table, answer the questions that follow.

Year (t) Cash flow

1 ............... $ 800

2 ............... 900

3 ............... 1,000

4 ............... 1,500

5 ............... 2,000

a. Determine the present value of the mixed stream of cash flows using a 5% discount rate.

b. How much would you be willing to pay for an opportunity to buy this stream, assuming that you can at best earn 5% on your investments?

c. What effect, if any, would a 7% rather than a 5% opportunity cost have on your analysis? (Explain verbally.)

Reference no: EM131111518

Questions Cloud

Sas simple linear regression printout relating : Refer to Exercises 9.21 and 9.29 (p. 487,493). The SAS simple linear regression printout relating number of employees y to age of a fast-growing firm x is reproduced above.

Develop a work breakdown structure : Develop a Work Breakdown Structure (WBS) and project schedule in a Gantt format for the E-Mail Upgrade Project described in the scenario.The WBS and resultant schedule should contain the following high-level activities: 1.0 Evaluate User & System ..

Developing and managing a global portfolio : One of the most difficult tasks of developing and managing a global portfolio is assessing the risks of potential foreign investments. Duke University researcher C. R. Henry collaborated with two First Chicago Investment Management Company directo..

Write a paper on communication non-verbal observations : In Arthur Conan Doyle's novel, 'The Hound of the Baskervilles', the famous detective Sherlock Holmes comes across a hat and a walking stick. By closely observing these two items, he deduces the age and profession of the owner, the color of his hair a..

Determine the present value of the mixed stream : Determine the present value of the mixed stream of cash flows using a 5% discount rate. How much would you be willing to pay for an opportunity to buy this stream, assuming that you can at best earn 5% on your investments?

Explain what is meant by service to the public : Policing is complex and involves different characteristics to fight crime and serve the public - Explain what is meant by service to the public and how do officers fulfill this mission.

Adopted the universal soil loss equation : The U.S. Department of Agriculture has developed and adopted the Universal Soil Loss Equation (USLE) for predicting water erosion of soils. In geographical areas where runoff from melting snow is common, the USLE requires an accurate estimate of s..

Write a paper about the marriage still matters : Write a paper about The Marriage still matters. You must use at least 8 scholarly sourcesin your paper, of which 3 must be articles. Your course textbooks may count as 2 of your 8 sources.

Consider the word processor : The communication of the message from the man to the machine is one factor to be considered. The other factor is the communication of the responding message from the machine to the man. Consider the word processor (i.e., Microsoft Word) you are cu..

User Account

All Pages