Year Net Cash Flow Discount Factor Present Value (using the factor) Present Value (using Excel formula) 0 $(3,500,000.00) 1 $(3,500,000.00) ($3,500,000.00) 1 $900,000.00 0.90909 $818, 181.00 $818, 181.82 2 $900,000.00 0.82645 $743,805.00 $743, 801.65 3 $900,000.00 0.75131 $676, 179.00 $676, 183.32 4 $900,000.00 0.68301 $614,709.00 $614,712.11 5 $900,000.00 0.62092 $558, 828.00 $558,829.19 Net PresentValue $(88,298.00) $(88,291.91) 3. Now assume that inflation is estimated as a 5% increase each year (startingwith Year 1) for the entire 5 years. Calculate the new net cash flow values for each year. Hint: You should startwith 5% increase for Year 1 net cash flow.

When dealing with cash flows that are subject to inflation, it is important to adjust the cash flow…

Answered: Year Net Cash Flow Discount Factor…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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What is the Net Present Value of the following cash flow stream? Year Cash Flow 0 -$1,977 1 $421 2 $889 3 $517 4 $939 Assume an interest rate of 3%
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n.com Connect (i) Consider the following cash flows: Year Cash Flow 0 -$29,600 1 14,100 2 14,800 3 11,200 a. What is the profitability index for the cash flows if the relevant discount rate is 11 percent? Note: 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 16 percent? Note: 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 23 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. a. Profitability index b. Profitability index c. Profitability index.
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Determine the ERR (External rate of return) of the cash flows if external rate (e) is given as %22. Cash Flow Year 0 1 2 3 4 5 6 7 Select one: a.0.2565 b.0.2638 c.0.3073 d.0.2988 e.0.3491 f.0.2783 -5000 2000 4000 -1500 3000 4000 -6000 9000
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es Consider the following cash flows: Year 013300 2 4 Cash Flow -$7,600 2,150 4,900 1,950 1,650 What is the payback period for the cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Payback period years
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