Question: 1) Assuming a discount rate of 5%, calculate the PV of a cash flow stream that pays $1,000 in three years and $2,000 in
1) Assuming a discount rate of 5%, calculate the PV of a cash flow stream that pays $1,000 in three years and $2,000 in 9 years. 2) Assuming a discount rate of 5%, calculate the PV of a 10-year ordinary annuity with annual payments of $10,000. 3) Assuming a required rate of return (discount rate) of 8%, what is the value of a common share with an expected perpetual stream of annual dividends, with the first dividend of $8.00 to be received in one year and with all subsequent dividends growing at a rate of 3%? 4) What is the PV of a stream of annual cash flows, with the first cash flow of $500 to be received in one year, the second cash flow of $600 in two years, and the third and final cash flow of $700 to be received in three years? Assume a discount rate of 9%? 5) Assuming a discount rate of 4%, what is the PV of a perpetual stream of annual cash flows of $1,000, with the first cash flow to be received in one year?
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1 To calculate the present value PV of the cash flow stream we can use the formula PV CF1 1 rt1 CF2 1 rt2 Where PV Present Value CF1 Cash flow in the ... View full answer
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