Find present value of shops future profits

Assignment Help Finance Basics

Reference no: EM1343804

I am looking for the way to solve these by hand and in Excel, and also the proper answer:

1. Suppose that the following cash flows are received:

0 = -$500, 1 = $200, 2 = $200, 3 = $200

The Internal Rate of Return on the cash flows (rounded to the nearest percent) is
8%, 9%, 10%, 11%, or 12%

2. A 10-year bond paying 8% annual coupons pays $1000 at maturity. If the required rate of return on the bond is 7%, then today the bond will sell (rounded to the nearest cent) for
$1000.00
$1210.45
$987.48
$1070.24

3. The annual revenue-growth rates for a new tech star tup during its first 4 years of operations were as follows:

1 = 50, 2 = 50, 3 = -50, 4 = -50

Rounded to the nearest tenth of one percent, the start up's 4-year Compound Annual Growth Rate was
-13.4% or -10.5%

4. Last year, a barber shop generated $100,000 in profit. Assume that the shop's profits grow at 5% per year and that cash flows are discounted at 10% per year. If profits are received at the end of each year, what is the present value of all the shop's future profits?
$2,100,000
$3,000,000

Reference no: EM1343804

Questions Cloud

Trade off theory and pecking order theory : Several theories are proposed to explain how companies deal with debt and financial distress.

Transmitting image using raster scan order : If we were to transmit this image using raster scan order, after 15 seconds how many rows of the image will the user have received?

Calculate percent change in price : Market, Inc. has a 7 year, 6% annual coupon bond outstanding with a $1,000 par value. The bond has a yield to maturity of 5.5%.

Explaining view of header and footer areas of worksheet : In which view can you see header and footer areas of worksheet?

Find present value of shops future profits : A 10-year bond paying 8% yearly coupons pays $1000 at maturity. If the required rate of return on the bond is 7%, then today the bond will sell for;

Person responsible for it acquisition projects : A frequent occurrence is for an IT acquisition project that is behind schedule and over budget to continue out of control till the costs become intolerable or some other event causes it to end, resulting in much waste of resources with few or no b..

How would you expect this to affect the value of your bond : federal reserve - explain how would you expect this to affect the value of your bond

Calculate expected return on a portfolio : A stock has a beta of 1.20 and an expected return of 14 percent. A risk-free asset currently earns 3.0 percent. Calculate the expected return on a portfolio that is equally invested in the two assets?

Sorting arrays of name in descending order : Then sort arrays so that records are in descending order by purchase amount for month. Output lists the names of the top five customers.

User Account

All Pages