What is the present value of the cash flows

Assignment Help Financial Management
Reference no: EM132072658

Your company is launching a product that will generate cash flows for 20 years. The first cash flow of $10,000 will occur one year from today (at t=1) and will grow at 5% in each subsequent year for the first ten years at which point the cash flow will plateau and remain constant for the reminder of the product life (so the cash flow grows 9 times, from t=2 to t=10, after which the cash flows remain constant at the amount that was paid at t=10). What is the present value of the cash flows if the discount rate is 7%?

Reference no: EM132072658

Questions Cloud

Bonds with attached warrants are frequently issued : Bonds with attached warrants are frequently issued. What is Cypress's net working capital?
Investment will make special payment : What is X, the amount of the special payment that will be made to Sasha in 4 years?
Expected to produce regular annual cash flows : A coffee shop is expected to produce regular annual cash flows of 45,609 dollars with the first regular cash flow expected later today
How much is pet care center worth : Liam owns a pet care center that has a cost of capital of 13.15 percent. How much is Liam's pet care center worth?
What is the present value of the cash flows : Your company is launching a product that will generate cash flows for 20 years. What is the present value of the cash flows if the discount rate is 7%?
What is the present value of working capital expenditures : What is the present value of working capital expenditures if a project entails a working capital expenditure of $100,000 immediately,
What is hemingway current average tax rate : What is Hemingway's current annual corporate tax liability? What is Hemingway's current average tax rate?
What is hemingway current annual corporate tax liability : What is Hemingway's current annual corporate tax liability? What is Hemingway's current average tax rate?
What is effective annual interest rate : What is the effective annual interest rate(EAR) if a bank charged you 10 percent annually (APR) with quarterly compounding?

Reviews

Write a Review

Financial Management Questions & Answers

  What will the percentage change in operating cash flow be

At an output level of 61,000 units, you calculate that the degree of operating leverage is 2. The output rises to 66,000 units. What will the percentage change in operating cash flow be?

  What is the fixed amount you have to save each year

When you retire, you want to have a two million dollars saved. what is the fixed amount you have to save each year?

  The beta be for other stock in portfolio

What must the beta be for the other stock in your portfolio?

  Percentage weight in the risky asset to dollars

You invest $100,000 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 15% and a standard deviation of 30% and a treasury bill with a rate of return of 2.0%. How much money should be invest..

  Use conventional CRM system versus cloud-based version

What management, organization, and technology issues should be addressed in deciding whether to use a conventional CRM system versus a cloud-based version?

  What is current price of bonds with four years to maturity

If the required rate of return on bnonds is 9%, what is the current price of the bonds with 4 years to maturity?

  New issue of common stock-the required return

Photochronograph Corporation (PC) manufactures time series photographic equipment. It is currently at its target debt-equity ratio of .63. It’s considering building a new $65.3 million manufacturing facility. If the tax rate is 38 percent, A new issu..

  Which bond will you buy and which bond will you short sell

Are you betting that rates are going to converge or diverge? Why? - Which bond will you buy and which bond will you short-sell?

  What amount of taxes will he pay on his capital gain

How much would Joel save in taxes if he held the stock for more than a year, assuming he sold it for the same amount?

  What is probability that project will have a npv greater

What is the probability that the project will have a negative net present value? What is the probability that the project will have a net present value greater than $2.2 million?

  Calculate the fair present values of the bonds

Calculate the fair present values of the following bonds, all of which pay interest semiannually, have a face value of $1,000,

  Transfers cash-net taxable income

Adam transfers cash of $300,000 and land worth $200,000 to Camel Corporation for 100% of the stock in Camel. In the first year of operation, Camel has net taxable income of $70,000. If Camel distributes $50,000 to Adam,

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