You invest $100 (at time 0) and expect to receive $115 in cash in one year. Your required return is 9 percent.

a.     Calculate the value of your investment at time 0 using discounted cash flow techniques.

b.     Calculate the value of your investment using residual earnings techniques.

c. Suppose that your accountant demanded that you expense $20 of your investment immediately such that the book value of the investment was $80 at time 0. Calculate the value of your investment under this accounting.

Answer rating: 100% (QA)

a Calculation of value of an investment in the Year 0 Assumed Discount Rate 9 Year Cash Flow Present ... View the full answer