Consider the streams of income given in the following table. a. Find the present value of each
Question:
a. Find the present value of each income stream, using a 15% discount rate.
b. Compare the calculated present values and discuss them in light of the fact that the undiscounted total income amounts to $10,000 in each case.
Transcribed Image Text:
Income Stream End of Year $ 4,000 3,000 2,000 1,000 $10,000 1,000 2,000 3,000 4,000 $10,000 4 Total
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 53% (13 reviews)
a As explained for problem 12 most financial calcula...View the full answer
Answered By
Joseph Ogoma
I have been working as a tutor for the last five years. I always help students to learn and understand concepts that appears challenging to them. I am always available 24/7 and I am a flexible person with the ability to handle a wide range of subjects.
5.00+
1+ Reviews
10+ Question Solved
Related Book For
Fundamentals of Investing
ISBN: 978-0133075359
12th edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
Question Posted:
Students also viewed these Accounting questions
-
Consider the streams of income given in the following table. a. Find the present value of each income stream, using a 1% discount rate, then repeat those calculations using an 8% discount rate. b....
-
The stream flow given in the following table was produced by a 1-cm rainfall event (total depth). The effective portion of the rainfall lasted 1 hr (from time 9 to time 10). If the watershed is 20...
-
Find the present value of each future amount: $15,402 for 120 days; money earns 6.3%
-
Oakey Wines is considering expanding on from the cafe to build a restaurant that will provide an evening experience of a meal, wine and entertainment. The package will be used to showcase new season...
-
Leandro has 16 hours per day that he can allocate to work or leisure. His job pays a wage rate of $20. Leandro decides to consume 8 hours of leisure. His indifference curves have the usual shape:...
-
Graph the following equations. y = 3x + 1
-
With reference to the preceding exercise, test the null hypothesis \(\beta=0.75\) against the alternative hypothesis \(\beta <0.75\) at the 0.10 level of significance.
-
The following financial data were reported by 3M Company for 2009 and 2010 (dollars in millions). Instructions (a) Calculate the current ratio and working capital for 3M for 2009 and 2010. (b)...
-
You have a staff of three (3) uniformed personnel in your office that can conduct inspections and fire prevention activities. Additionally you have eleven (11) uniformed staff on duty that can...
-
A non-angler, curious to know what counts as a good day of fishing (F) at the lake and puzzled by the phenomenon that it can sometimes be a good day even when no fish are caught, decides to create a...
-
Find the present value of each of the following streams of income, assuming a 12% discount rate. End of Year End of End of Income ($) Year 1-5 6-10 Year Income ($) Income ($) 10,000 yr 8,000 yr 2,200...
-
For each of the investments below, calculate the present value of the annual end-of-year returns at the specified discount rate over the given period. Investment Annual Returns ($) 1,200 5,500 700...
-
How much is $102 after a decrease of 100%?
-
Calculate the exemption amount for the following cases for 2018 for a single taxpayer, married taxpayer filing jointly, and a married taxpayer filing separately when AMTI is \(\$ 800,000\).
-
What is the amount of tax preference for alternative minimum tax purposes assuming that an individual sells some qualified small business stock held more than five years at a \(\$ 20,000\) gain.
-
Which one of the following best describes the strategic approach your company is taking in trying to compete successfully on an international basis? Multidomestic or think-local, act-local approach....
-
Green Corporation purchased 100 percent of the outstanding stock of White Corporation during 2016. During 2018, Green Corporation distributes all of its White Corporation stock to Green shareholders....
-
Which of the following taxpayers should itemize? Explain. a. Robert is a single taxpayer. He has itemized deductions of \(\$ 12,200\). b. Jane qualifies as head of household. Her itemized deductions...
-
Plot P against V at 647.3 K for water with the ESD equation using the characterization analogous to Eqns. 15.7315.76. Apply the equal area rule and determine the vapor pressure at that temperature....
-
10m solution. If Ka(HA) = 10 then pOH of solution will be [Given : log4=0.6] (A) 6.7 (B) Greater than 6.7 & less than 7.0 (C) Greater 7.0 & less than 7.3 (D) Greater than 7.3
-
Why have the fiscal plans of the Italian coalition government caused tensions with the EU Commission?
-
Briefly describe the composition and general thrust of each of the following indexes. a. NYSE Composite Index b. NYSE MKT Composite Index c. Nasdaq Stock Market indexes d. Value Line Composite Index
-
Imagine that the Mini-Dow Average (MDA) is based on the closing prices of five stocks. The divisor used in the calculation of the MDA is currently 0.765. The closing prices for each of the five...
-
The SP-6 Index (a fictitious index) is used by many investors to monitor the general behavior of the stock market. It has a base value set equal to 100 at January 1, 1978. In the accompanying table,...
-
4. Find the basis of R2 in which coordinates of the vector v = [2,-5] are (3, 1). 5. Find the basis of R3 in which coordinates of the vector v = [1,6,-4] are (1, 2, 4).
-
Draw a Venn diagram and use the given information to fill in the number of elements in each region. n(A)=24, n(B) = 17, n(AUB) = 32, n (A') = 15 Complete the Venn diagram. U X A B x = 0, y = 1, z=,...
-
9. Does this voting system having a Condorcet Candidate? If so, find it. Number of voters 14 15 2 1st choice A CB 2nd choice B B C 3rd choice C A A 10. Does this voting system having a Condorcet...
Study smarter with the SolutionInn App