Purchase an asset that is expected to generate cash flows

Assignment Help Financial Management

Reference no: EM13729392

You have the opportunity to purchase an asset that is expected to generate cash flows for the next 32 years. The purchase price of the asset is $18,650,866. What annual annuity cash flow would you have to expect to receive over the life of the asset in order to justify the purchase if the appropriate discount rate is 8%? State your answer in dollars and cents. The dollar sign is not necessary.

Reference no: EM13729392

Questions Cloud

About the retirement plan : You are considering your retirement, and would like to have accumulated $1,839,829 by the time you retire in 27 years. If you anticipate that your average compounded rate of return over the 27 years until retirement will be 12%, how much will you nee..

Which questions did you find to be easiest and why : You learned that to become a critical thinker, you must develop certain skills. Which questions did you find to be easiest and why

Demonstrate effective online communication : Demonstrate effective online communication using a visual presentation medium

What is the nominal risk free rate of interest : The real risk free rate of interest is 2.9%. Inflation is expected to be 3.2% next year, 4.7% the year after that, and 5.2% in the third year. What is the nominal risk free rate of interest that you would expect on a 3 year treasury security today gi..

Purchase an asset that is expected to generate cash flows : You have the opportunity to purchase an asset that is expected to generate cash flows for the next 32 years. The purchase price of the asset is $18,650,866. What annual annuity cash flow would you have to expect to receive over the life of the asset ..

Defines leadership and management : Defines leadership and management. Defends or criticizes the view that leadership and management are different concepts. Gives specific examples that support your position. Discusses the implications of your general leadership views. In addition to t..

Assume that the expectations theory holds : Assume that the expectations theory holds, and that liquidity and maturity risk premiums are zero. If the annual rate of interest on a 2-year Treasury bond is 5.1 percent and the rate on a 1-year Treasury bond is 3 percent, what rate of interest shou..

What is the average expected rate of inflation : Suppose that the annual expected rates of inflation over each of the next five years are 4 percent, 5 percent, 7 percent, 11 percent, and 10 percent, respectively. What is the average expected rate of inflation over the 5-year period? Use the arithme..

How much is the bond worth today : Suppose an Exxon Corporation bond will pay $9,138 41 years from now. If the going interest rate on similar 41-year bonds is 2.26%, how much is the bond worth today? State your answer in whole dollars.

User Account

All Pages