CF PV =! PV = the present value of an ordinary annuity (aka: finite series...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
CF PV =! PV = Σ the present value of an ordinary annuity (aka: finite series of cash flows): CF (1+r)i (I) (II) CF CF Σ₁=1 (1+r)i With CF > 0 and 0 <r < 1. We know that PV = converges to PV y" n approaches ∞o. Create a numerical example to show that this is so and explain the relevance of this convergence with respect to the estimation of financial asset valuation. = as CF PV =! PV = Σ the present value of an ordinary annuity (aka: finite series of cash flows): CF (1+r)i (I) (II) CF CF Σ₁=1 (1+r)i With CF > 0 and 0 <r < 1. We know that PV = converges to PV y" n approaches ∞o. Create a numerical example to show that this is so and explain the relevance of this convergence with respect to the estimation of financial asset valuation. = as
Expert Answer:
Answer rating: 100% (QA)
The formula for the present value of an ordinary annuity is as follows PV CF 1rn Where PV represents ... 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:
Students also viewed these finance questions
-
1. Evaluate whether the following statements are true or false in relation to cash and cash equivalents: I. Demand Deposits forms part as cash just like savings and time deposit. II. Stale checks...
-
A business manager is paid AED 920 for an 8-hour working day. Calculate how much money the manager is paid for 13 hours.
-
The present value of an ordinary annuity of $2,350 each year for eight years, assuming an opportunity cost of 11 percent, is ________. A) $ 1,020 B) $27,869 C) $18,800 D) $12,093
-
Now apply one of those decision making models (Philosophical) to this scenario: Scenario: You are a CPA in the accounting department at a HealthCare System with three other accountants. You are good...
-
Monitor uses activity-based costing. Two of Monitor's production activites are kitting (assembling the raw materials needed for each computer in one kit) and boxing the completed products for...
-
The following account appeared in Annas ledger: Which statement is correct? A. On 5 January Jodie sold goods, $500, to Anna. B. On 7 January Anna returned goods, $20, to Jodie. C. On 29 January Anna...
-
Define strategic management accounting.
-
Bond X is a premium bond making semiannual payments. The bond pays a 9 percent coupon, has a YTM of 7 percent, and has 13 years to maturity. Bond Y is a discount bond making semiannual payments. This...
-
[The following information applies to the questions displayed below.] The following financial statements and additional information are reported. IKIBAN INCORPORATED Comparative Balance Sheets At...
-
If the a company has a market value of debt of 5 million pound and a market value of equity of 15 million pounds what's is the weight of debt for wacc calculation purpose?
-
! Required information Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] Hudson Company reports the following...
-
What are the 5 models of OB? What are the three goals of organizational behavior? What are the four 4 forces of organizational Behaviour? What is the role of manager in organisational behaviour?
-
You have hit it rich. Natural Gas has been discovered on the land that you inherited from your grandma in Southern Indiana. After tense negotiations between your lawyer and Evansville Gas Extraction...
-
Discuss the concept of "cultural fit" in recruitment and its implications for organizational diversity and inclusion efforts. How can companies balance cultural fit with the need for diverse...
-
1. Why does video conferencing have high information richness? 2. What are emotional disconnects and why do they matter in business communication? 3. List the stages in Tuckman's model of group...
-
Determine 10%-per-year present worth (PW) of taxes over a 6-year study period. P= $100, 5=0, GI-OE = $50, and T = 30%. Use straight-line method to determine the present worth (PW) of the tax with n =...
-
En el CAPM hay activos que pueden tener betas menores a cero.Cuando esto ocurre, cul de las siguientes afirmaciones describesu inversin?A. Esta inversin tendr un rendimiento esperado meno 1 answer
-
Why is it important to understand the macro-environment when making decisions about an international retail venture?
-
At what amount does a company record the cost of a nonmonetary asset acquired in exchange for another nonmonetary asset?
-
Hart Corporation is a chemical company that produces cleaning fluids of different types; it is the main employer in a small town. Stan Hart has been the company president for 15 years and is paid a...
-
The following are several independent errors made by a company that uses the periodic inventory system: 1. Goods in transit, purchased on credit and shipped FOB destination, $10,000, were included in...
-
The following extract is from Conceptual Framework for Financial Accounting and Reporting: Elements of Financial Statements and Their Measurement, FASB 3, December 1976. The benefits of achieving...
-
The following extract is from Comments of Leonard Spacek, in R.T. Sprouse and M. Moonitz, A Tentative Set of Broad Accounting Principles for Business Enterprises, Accounting Research Study No. 3,...
-
What factors should be considered in selecting an allocation base?
Study smarter with the SolutionInn App