what is the maximum willingness to pay for a high risk investment (discount rate of 10...
what is the maximum willingness to pay for a high risk investment (discount rate of 10 percent) to receive revenues of $300,000 per year for the next 3 years, plus an expected salvage value of $0.8 million in year 4.
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what is the maximum willingness to pay for a high risk
investment (discount rate of 10...
3. Calculate the present value of the following sequence of willingness to pay amounts: this year,...
3. Calculate the present value of the following sequence of willingness to pay amounts: this year, $100; next year, $150; year 2, $150; year 3, $50. Use a 5 percent discount rate. Recalculate using a discount rate of 8 per- cent. What is the effect of using a higher discount rate?
Lincoln Systems Co, is an all equity firm with 15 million shares of outstanding. A discount...
Lincoln Systems Co, is an all equity firm with 15 million shares of outstanding. A discount rate of 17 percent is appropriate a firm of risk. It is required to value stocks by using Free Cash Flows. The company’s revenues are forecasted to 500 million in one year are expected grow at 10 percent per year for the two years after that 7 percent per year for the next two years, and 6 percent per year after that. Expenses including...
An investment will pay you $23,000 in 7 years. The appropriate discount rate is 10 percent...
An investment will pay you $23,000 in 7 years. The appropriate discount rate is 10 percent compounded daily. What is the present value? Multiple Choice $11,802.64 $11,993.68 $10,851.43 $11,765.23 $11,422.56
An investment will pay you $22,000 in 7 years. The appropriate discount rate is 10 percent...
An investment will pay you $22,000 in 7 years. The appropriate discount rate is 10 percent compounded daily. Required: What is the present value? rev: 09_17_2012 Multiple Choice $11,253.70 $11,472.22 $10,925.92 $10,379.63 $11,289.48
QUESTION 1 The Lincoln’s are considering an investment that is expected to pay $750 per month...
QUESTION 1 The Lincoln’s are considering an investment that is expected to pay $750 per month for the next 10 years. If their required rate of return is 9.5 percent, how much is this investment worth to them today? $7,184 $57,961 $7,895 $1,932 QUESTION 2 Jefferson owns an investment that will pay $6,500 per year forever into the future. If his discount rate is 21 percent, how much is this investment worth to him today? $30,952 $310 $26,351 $136,500...
An investment will pay you $42,000 in 8 years. If the appropriate discount rate is 6.8...
An investment will pay you $42,000 in 8 years. If the appropriate discount rate is 6.8 percent compounded daily, what is the present value? (Use 365 days a year. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
1. Present Value and Multiple Cash Flows [LO1] Investment X offers to pay you $4,200 per...
1. Present Value and Multiple Cash Flows [LO1] Investment X offers to pay you $4,200 per year for eight years, whereas Investment Y offers to pay you $6,100 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5 percent? If the discount rate is 15 percent? 2. Future Value and Multiple Cash Flows [LO1] Fuente, Inc., has identified an investment project with the following cash flows. If the...
Investment X offers to pay you $5,900 per year for nine years, whereas Investment Y offers...
Investment X offers to pay you $5,900 per year for nine years, whereas Investment Y offers to pay you $8,600 per year for five years. a. Calculate the present value for Investments X and Y if the discount rate is 4 percent. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. Calculate the present value for Investments X and Y if the discount rate is 14 percent (Do not round intermediate calculations and round your...
1. A potential investment pays $10 per year indefinitely. The appropriate discount rate for the potential...
1. A potential investment pays $10 per year indefinitely. The appropriate discount rate for the potential investor is 10%. How is the present value of this cash flow calculated? 2. Suppose you have a choice of two equally risky annuities, each paying $1,000 per year for 20 years. One is an annuity due, while the other is an ordinary annuity. Which annuity would you choose? 3. Your college has agreed to give you a $10,000 tuition loan. As part of...
An investment will pay you $20,000 in 8 years. The appropriate discount rate is 11 percent...
An investment will pay you $20,000 in 8 years. The appropriate discount rate is 11 percent compounded daily. Required: What is the present value? $8,545.66, $8,296.76, $8,678.53, $7,881.92, $8,711.60
3. Calculate the present value of the following sequence of willingness to pay amounts: this year, $100; next year, $150; year 2, $150; year 3, $50. Use a 5 percent discount rate. Recalculate using a discount rate of 8 per- cent. What is the effect of using a higher discount rate?
1. A potential investment pays $10 per year indefinitely. The appropriate discount rate for the potential investor is 10%. How is the present value of this cash flow calculated? 2. Suppose you have a choice of two equally risky annuities, each paying $1,000 per year for 20 years. One is an annuity due, while the other is an ordinary annuity. Which annuity would you choose? 3. Your college has agreed to give you a $10,000 tuition loan. As part of...
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