Discounting a future cash flow at 15 percent results in a lower present value than does discounting
Question:
Step by Step Answer:
The present value of a future amount is the amount of money which if invested today to earn ...View the full answer
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
Related Video
The present value of future cash flows is calculated to determine the value today of a stream of future cash flows. It is calculated by discounting the future cash flows to their present value using a discount rate. The discount rate reflects the time value of money and the risk of the cash flows. It is important because it helps in making investment decisions, capital budgeting, loan decision making, and financial planning. By discounting future cash flows to their present value using a discount rate, it takes into account the time value of money and the risk associated with the cash flows. This allows investors, lenders, and financial planners to evaluate the viability of potential investments, projects, or loan applications, and to estimate the future value of investments or savings. calculating the present value of future cash flows is important in making investment decisions, capital budgeting, loan decision making, and financial planning. It helps to determine the viability of long-term projects, evaluate loan applications, and estimate the future value of investments or savings.
Students also viewed these Corporate Finance questions
-
What nonfinancial considerations should be taken into account regarding a proposal to install a fire sprinkler system in a finished goods warehouse?
-
Explain the rules of debit and credit with respect to transactions recorded in revenue and expense accounts.
-
Five account classifications are shown as column headings in the table below. For each account classification, indicate the manner in which increases and decreases are recorded (i.e., by debits or...
-
Dominic and Magalie have been married for five years and have thes children, aged four, seven and nine. Dominic and Magale are diverong and Magalie has been ordered to pay child support, until the...
-
Is the consumer decision process a rational one, an emotional one or some combination of the two?
-
Why is developing a financial plan so important to an entrepreneur about to launch a business?
-
Show that the second moment \(\overline{I^{2}}\) of the intensity of a wave is not equal to the fourth moment \(\overline{\left[u^{(r)} ight]^{4}}\) of the real amplitude of that wave, the difference...
-
C. B. Seabright, a U.S. congresswoman, has just received from her staff an analysis of FASB Statement No. 106, Employers Accounting for Postretirement Benefits Other Than Pensions. Seabright is very...
-
The Saleemi Corporation's $3,000 bonds pay 5 percent interest annually and have 13 years until maturity. You can purchase the bond for $800. a. What is the yield to maturity on this bond? b. Should...
-
Driving an automobile safely requires a large amount of individual skill. Even if not generally recognized, the driver needs an intuitive ability to utilize feedforward and feedback control methods....
-
What is the major shortcoming of using the payback period as the only criterion in making capital budgeting decisions?
-
What is the definition of interest?
-
A food service manager wants to be 95% certain that the error in the estimate of the mean number of sandwiches dispensed over the lunch hour is 10 or less. What sample size should be selected if a...
-
You're a manager in Japan, and you've just discovered that a team leader under your supervision has made a mistake that will result in a quality problem. How will you handle this mistake?
-
Two students each build a piece of scientific equipment that uses a 655-mm-long rod. One student uses a glass rod, the other a copper rod. If the temperature increases by 4.0C, how much more does the...
-
Type out the correct answer ASAP with proper explanation . Thank you . 1.Explain Ricardo's theory of distribution. 2.Explain and show graphically the relationship between rent and prices.
-
On January 1, 2009, Bruno owed $8,384 to his friend Alexandra, who was kind enough not to charge Bruno any interest. Each month during 2009, Bruno paid Alexandra some of the money he owed. If Bruno...
-
1. How do the operations strategies of Pizza Hut differ in China versus in the United States? 2. What cultural differences have played into the design of the food and drink choices offered in China?...
-
Explain how quartiles can be used to detect outliers in a data set.
-
Write an essay describing the differing approaches of nursing leaders and managers to issues in practice. To complete this assignment, do the following: 1. Select an issue from the following list:...
-
On September 1, 2011, Park Rapids Lumber Company issued $80 million in 20-year, 10 percent bonds payable. Interest is payable semiannually on March 1 and September 1. Bond discounts and premiums are...
-
The following items were taken from the accounting records of Minnesota Satellite Telephone Corporation (MinnSat) for the year ended December 31, 2011 (dollar amounts are in thousands): Accounts...
-
As of December 31 of the current year, Chernin Corporation has prepared the following information regarding its liabilities and other obligations: Notes payable, of which $10,000 will be repaid...
-
If you weigh your portfolio in 80% risky and 20% risk-free t bills. The optimal risky portfolio consists of 40% in bonds and 60% in ETFs. How much will you have invested in t-bills, bonds, and etfs?
-
b. A 25-year mortgage loan of $184,000 at a 10 percent compound annual interest rate with equal installment payments at the end of each year.
-
What are Cloud-based Services? How does this differ to the common virtualization model?
Study smarter with the SolutionInn App