The following solution is suggested to handle the subject “The appropriate discount rate for the following cash flows is 9 percent compounded quarterly. Year Cash…“. Let’s keep an eye on the content below! The appropriate discount rate for the following cash flows is 9 percent compounded quarterly. Year Cash Flow $ 860 940 10 points 1,530 eBook Print What is the present value of the cash flows? (Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) References Present value AnswerFind the annual effective rate. EAR = [1+i/m]m + 1 i – nominal Rate = 9% m = no. m – no. EAR = (1+0.09/4)41 = 1.022541 = 1.093083 – 1 = 0.093083 = 9.3083% Find the sum of all cash flows, now. PV = FV/(1+r). PV – Present value Future Value – FV r – Interest Rate n – number Periods Current value of cash flows = 860/ (1+0.093083)1+940/(1+0.093083)2+0/(1+0.093083)3+1530/(1+0.093083)4 = 786.7653 + 786.72205 + 0 + 1071.71267 = 2645.1999 The present value of the cash flows given is $2645.20 = ConclusionAbove is the solution for “The appropriate discount rate for the following cash flows is 9 percent compounded quarterly. Year Cash…“. We hope that you find a good answer and gain the knowledge about this topic of business.
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Knowledge Booster Learn more about Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below. Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in year two, $2,000 in year three. $2,500 in year four, and $2,000 in year five. What is the NPV using 8% as the discount rate? For further instructions on net present value in Excel, see Appendix C. Project Y cost $8,000 and will generate net cash inflows of $1,500 in year one, $2,000 in year two, $2,500 in year three, $3,000 in year four and $2,000 in year five. What is the NPV using 8% as the discount rate? The appropriate discount rate for the following cash flows is 7.83 percent per year. Year Cash Flow 1 $ 2,570 2 0 3 4,010 4 2,260 What is the present value of the cash flows? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.) The appropriate discount rate for the following cash flows is 6.98 percent per year. Year Cash Flow 1 $ 2,400 2 0 3 3,840 4 2,090 What is the present value of the cash flows? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.) Present Value Year Cash Flow ($) 0 17,700 1 10,000 2 8,900 3 5,400 What is the profitability index for the set of cash flows if the relevant discount rate is 11 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) The present value of the following cash flow stream is $8,650 when discounted at 9.5 percent annually. What is the value of the missing cash flow? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) 1 $2,250 2 ??? 3 2,850 4 3,450 Consider the following cash flows: Year Cash Flow 0 –$ 32,000 1 14,200 2 17,500 3 11,600 a. What is the NPV at a discount rate of zero percent? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b. What is the NPV at a discount rate of 10 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the NPV at a discount rate of 20 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What is the NPV at a discount rate of 30 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Consider the following cash flows: Year Cash Flow 0 −$28,300 1 15,400 2 13,500 3 9,900 a. What is the profitability index for the cash flows if the relevant discount rate is 9 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) b. What is the profitability index if the discount rate is 14 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) c. What is the profitability index if the discount rate is 25 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) The present value of the following cash flow stream is $8,400 when discounted at 9 percent annually. What is the value of the missing cash flow? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Please use formulas and give explanation) Year Cash Flow 1 $2,000 2 3 2,600 4 3,200 Recommended textbooks for you Cornerstones of Cost Management (Cornerstones Ser... ISBN:9781305970663 Author:Don R. Hansen, Maryanne M. Mowen Publisher:Cengage Learning Financial Management: Theory & Practice ISBN:9781337909730 Author:Brigham Publisher:Cengage
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If the appropriate discount rate for the following cash flows is 9 percent
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