Chapter Eight Exercise 1

Basic present value calculations Calculate the present value of the following cash flows, rounding to the nearest dollar:

A single cash inflow of $12,200 in 5 years, discounted at a 12% rate of return.

An annual receipt of $16,200 over the next 12 years, discounted at a 14% rate of return.

A single receipt of $15,200 at the end of Year 1 followed by a single receipt of $10,000 at the end of Year 3. The company has a 10% rate of return.

An annual receipt of $8150 for 3 years followed by a single receipt of $10,000 at the end of Year 4. The company has a 16% rate of return.

PLEASE COMPLETE ANSWERS IN THE FOLLOWING FORMAT. I HAVE TO PLACE ANSWERS IN AN PREFORMATED EXCEL SPREADSHEET.

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Questions 13 14 Single cash flow (Note: Use Excel NPV enter rate and use a column with a zero amount for years 1-4 (row 1-4) and 12000 entered in year 5 (row 5) 15 16 17 Annual receipt 18 (Note: Use Excel PV function.) 19 20 single receipt 21 (Note: use NPV and same approch as above.) 23 Annual receipt (Note: use NPV and same approch as above.) 24 26 27 Student Guidance Report Ready Type here to search YOUR ANSWERS BASED UPON COURSE START DATE