1 using a financial calculator input n = 10, pv = -1, pmt = 0, fv = 2, and i = solving for i you obtain 718% 2 using a financial calculator, input n = 10, i = 10, pv = -1, pmt = 0, and fv = solving for fv you obtain $259 this formulation recognizes the interest on interest phenomenon 2-5 for the same stated rate, daily compounding is best. Chapter 02 - how to calculate present values 2-5 19 what is the present value of the following cash flow at a discount rate of 9% a $372,43181 b $450,000 c $405,95068 d none of the above 20 at an interest rate of 10%, which of the following cash flows should you prefer a option a b option b c option c d option d 21. Pv = ( $2 million)/1085 + ( $2 million)/10810 = $2288 million sale for scrap brings in revenue of $15 million at t = 15 pv = $15 million/108 15 = $0473 million.

Chapter 02 - how to calculate present values 2-1 chapter 2 how to calculate present values answers to problem sets 1 if the discount factor is 507, then 507112 6 = $1 2 125/139 = 899 3 pv = 374/(109) 9 = 17220 4 pv = 432/115 + 137/(115 2) + 797/(115 3) = 376 + 104 + 524 = $1,003 5 fv = 100115 8 = $30590 6. Chapter 02 - how to calculate present values 2-3 e af 3 = df 1 + df 2 + df 3 = af 2 + df 3 2465 = 1724 + df 3 df 3 = 0741 14.

Chapter how to calculate present values 0 mr basset is buying a security worth $0,000 now, which is its present value the unknown is the annual payment using the present value of an annuity formula. Chapter 02 - how to calculate present values c 17 period present value 0-400,000 00 1 +100,000/ 112 = + 89,28571 2 +200,000/ 112 2 = +159,438 78 3 +300,000/ 112 3 = +213,534 07 total = npv = $62,25856 18 we can break this down into several different cash flows, such that the sum of these separate cash flows is the total cash flow.

Chapter 02 - how to calculate present values chapter 2 how to calculate present values answers to problem sets 1 if the discount factor is 507, then 507112 6 = $1 2 125/139 = 899 3 pv = 374/(109) 9 = 17220 4 pv = 432/115 + 137/(115 2) + 797/(115 3) = 376 + 104 + 524 = $1,003 5 fv = 100115 8 = $30590 6. Mini case: 2 - 1 chapter 2 time value of money answers to selected end-of-chapter questions 2-1 a pv (present value) is the value today of a future payment, or stream of payments.

A calculate the net present value (npv) of each press b using npv, evaluate the acceptability of each press c rank the presses from best to worst using npv d calculate the profitability index (pi) for each press e rank the presses from best to worst using pi 31a precision lathe costs $10,000 and will cost $20,000 a year to operate and maintain. Pv = (1 / 10)/(110)7 = 10/2= $5 (approximately) c a perpetuity paying $1 starting now would be worth $10, whereas a perpetuity starting in year 8 would be worth roughly $5.

1 chapter how to calculate present values 0 mr basset is buying a security worth $0,000 now, which is its present value the unknown is the annual payment using the present value of an annuity formula, we have: pv c r r ( r) t $0,000 c (08) c $0, (08) $, a. 2-4 chapter 02 - how to calculate present values 19 what is the present value of the following cash flow at a discount rate of 9% a $372,43181 b $450,000 c $405,95068 d none of the above 20 at an interest rate of 10%, which of the following cash flows should you prefer a option a b option b c option c d option d 21. 15 the present value formula for a cash flow expected one period from now is: a pv = c1 r) b pv = c1/(1 + r) c pv = c1/r d pv = (1 + r)/c1 16 the net present value formula for one period is: a npv = c0 + [c1/(1 + r)] b npv = pv required investment c npv = c0/c1 d npv = c1/c0 17.

2 pv = ct / dft dft = $125 / $139 dft = 8993 est time: 01-05 3 pv = ct / (1 + r)t pv = $374 / 1099 pv = $17220 est time: 01-05 4 a pv = c1 / (1 + r)1 + c2 / (1 + r)2 + c3 / (1 + r)3 pv = $432 / 115 + $137 / 1152 + $797 / 1153 pv = $1,00328 b npv = pv – investment npv = $1,00328 – 1,200 npv = –$19672 est time: 01-05 5 a false.

Chapter 02 how to calculate present values multiple choice questions 1 the present value of $10000 expected two years from today at a discount rate of 6% is: a $11236 b $10600 c $10000 d $8900 2 present value is defined as: a future cash flows discounted to the present by an appropriate discount rate b inverse of future cash flows.

Chapter 2 how to calculate present

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