What is the present value of all future cash flows

Assignment Help Accounting Basics
Reference no: EM133165751

Questions -

Q1. A security pays an annual cash flow of $0.9 forever. The appropriate discount rate is 9% per year. (Assume the first cash flow is paid one year from now.) What is the present value of all future cash flows?

Q2. You want to buy a house financed with a 15-year fixed-rate mortgage. The best interest rate you could find is 13% APR. Payments are made monthly, so the APR should be assumed to be a simple interest rate (i.e. the wrong thing) compounded monthly with no other adjustments. What is the most you can borrow if you can only afford to pay $1,500 per month?

Q3. You've bought an inflation-adjusted annuity to give you a constant real income during your retirement years. The annuity will make 20 annual payments. The first payment of $80,000 will occur one year from now, and annual payments will increase at the rate of inflation, 2%, for 19 years and then stop. The interest rate is 5%. What is the present value of these cash flows?

Q4. What is the present value of these cash flows? What is the AIR (the simple rate) on the loan? (Assume that there are exactly 52 weeks in a year.)

Q5. A security pays $800 every 8 years forever. The appropriate discount rate is 4% (EAR). What is the value of the security if the first payment occurs 5 years from now?

Reference no: EM133165751

Questions Cloud

Strategy development and choice : The retail industry in South Africa is stable and mature with large and small companies competing on the basis of price , quality and service.
How to lead during a crisis-chilean miners : Building on the article "How to Lead During a Crisis: Chilean Miners", which learnings on crisis management could you apply to an automotive firm.
How is compensation related to a company performance : There has been a lot of literature on the degree to which compensation is motivational. How is compensation related to a company's performance?
Types of compensation and benefits : It is intuitively obvious that smaller companies cannot offer the same pay and benefits as larger companies that can spread their costs. Obviously, a new tech s
What is the present value of all future cash flows : The appropriate discount rate is 9% per year. (Assume the first cash flow is paid one year from now.) What is the present value of all future cash flows
Performance-enhancing substances : A doctor prescribes a testosterone patch for your father. It enables him to continue working in a highly paid, highly demanding job. His annual performance bonu
Organisations strategic decision makers : Proposals for the organisation's strategic decision makers - critical discussion focused on your individual and specific contribution, including analysis
Maximise team efficiency : Describe how your mise en place list will help you to maximise your team's efficiency. What factors did you take into consideration when you developed your plan
Theories of international trade and investment : As the world becomes increasingly dependent on information technology (IT) products and services, the global IT outsourcing industry has expanded rapidly.

Reviews

Write a Review

Accounting Basics Questions & Answers

  What is the amount of gain or loss recognized on the sale

What is the amount of gain or loss recognized on the sale of the land contributed by Jessica? What is the character of this gain or loss

  Herberts concern about the variable cost of the place mats

Comment on Herberts concern about the variable cost of the place mats

  How much of home office expense can he deduct

Let's assume that Tom incurs home office expenses in 2014 at $3,000 working on his online trading business, How much of home office expense can he deduct

  What are the three characteristics for operating

Identify the incremental, sunk, and opportunity costs associated with this decision. Assume that any cost savings will be invested elsewhere in more productive

  Explaining how much US source income will generate

Write a letter to Gloria explaining how much U.S.-source income she will generate, if any, from her participation in these tournaments

  Determine the consolidated income

Assume further that the same separate profits were reported. Determine the consolidated income, the controlling share, and the non-controlling share

  Compute the number of trays budgeted

The Mendez Company expects sales in 2010 of 200,000 units of serving trays. Mendez's beginning inventory for 2010 is 15,000 trays; target ending inventory, 25,000 trays. Compute the number of trays budgeted for production in 2010.

  Determine the amount of sales that would be necessary

Determine the maximum income from operations possible with the expanded plant

  Holding periods

Cassie owns a Rembrandt painting she acquired on June 1, 2009 as an investment. She exchanges the painting on September 5, 2011, for a Picasso sculpture and marketable securities to be held as an investment. On what date does the sculpture's holdi..

  Prepare journal entries for Establishment of Petty Cash Fund

Receipts for the following presented for the month of August: Taxi Fares $ 72.00. Prepare journal entries for Establishment of the Petty Cash Fund

  Financial statements in accordance with gaap

Texark Inc., a calendar year taxpayer, reported $5,210,300 net income before tax on its financial statements prepared in accordance with GAAP. The corporation's records reveal the following information.

  Calculate the profit at each of the levels of output

Budget at 2.50.000 units. 4.00,000 units and 5,00.000 units of output per quarter and calculate the profit at each of the above levels of output.

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