Calculate the present value of an annuity due consisting of three cash flows of $1,000 each,...
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Calculate the present value of an annuity due consisting of three cash flows of $1,000 each, each one year apart. Use a 6% compounded interest rate per vear. (b) Calculate the future value at the end of the third period of an annuity due consisting of three cash flows of $1,000 each, each one year apart. Use a 6% compounded interest rate per year. Question 4 (Total marks =15) You are evaluating an investment project, Project XX, with the following cash flows: Period 0 1 2 3 4 5 Cash Flow -$150,000 $65,000 $65,000 $65,000 $65,000 -$65,000 Calculate the following: (a). Payback period (b). Calculate the discounted cash flows for each year, assuming a 10% discount rate. (3 marks) (c). Discounted payback period, assuming a 12% cost of capital. (d). Net present value, assuming a 12% cost of capital. (e). Profitability index, assuming a 8% cost of capital. (f). Approximate internal rate of return (g). Modified internal rate of return, assuming reinvestment at 10%. Calculate the present value of an annuity due consisting of three cash flows of $1,000 each, each one year apart. Use a 6% compounded interest rate per vear. (b) Calculate the future value at the end of the third period of an annuity due consisting of three cash flows of $1,000 each, each one year apart. Use a 6% compounded interest rate per year. Question 4 (Total marks =15) You are evaluating an investment project, Project XX, with the following cash flows: Period 0 1 2 3 4 5 Cash Flow -$150,000 $65,000 $65,000 $65,000 $65,000 -$65,000 Calculate the following: (a). Payback period (b). Calculate the discounted cash flows for each year, assuming a 10% discount rate. (3 marks) (c). Discounted payback period, assuming a 12% cost of capital. (d). Net present value, assuming a 12% cost of capital. (e). Profitability index, assuming a 8% cost of capital. (f). Approximate internal rate of return (g). Modified internal rate of return, assuming reinvestment at 10%.
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Answer rating: 100% (QA)
a To calculate the present value of an annuity due we can use the formula PV C 1 1 rn r where PV is the present value C is the cash flow per period r is the interest rate per period and n is the numbe... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
Posted Date:
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