ACC 206 Week 5 Assignment.xlsx - 1 Basic present value calculations Calculate the present value of the following cash flows rounding to the nearest

ACC 206 Week 5 Assignment.xlsx - 1 Basic present value...

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a) FV ($12,000) Periods 5 Rate of Return 12% PV $6,809.12 b) Payaments $16,000 Periods 12 Discount Rate 14% PV ($90,564.67) c) Year Cash Flow 1 $15,000 2 $0 3 $10,000 Discount Rate 10% PV $21,149.51 d) Year Cash Flow 1 $8,000 2 $8,000 3 $8,000 4 $10,000 Discount Rate 16% PV $23,490.03 1. Basic present value calculations Calculate the present value of the following cash flows, rounding to the nearest dollar: a. A single cash inflow of $12,000 in five years, discounted at a 12% rate of return. b. An annual receipt of $16,000 over the next 12 years, discounted at a 14% rate of return. c. A single receipt of $15,000 at the end of Year 1 followed by a single receipt of $10,000 at the end of Year 3. The company has a 10% rate of return. d. An annual receipt of $8,000 for three years followed by a single receipt of $10,000 at the end of Year 4. The company has a 16% rate of return.
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Bruce Greene Investment ($10,000) Number of Shares Purchased 500 Div. 20X1 $2.60 Div. 20X2 $2.60 Div. 20X3 $3.10 $13,000 Required Return 16% a) Year Cash Flow 0 ($10,000) 1 $1,300.00 2 $1,300.00 3 $1,550.00 3 $13,000 b) Year Cash Flow PV Factor @ 16% PV 0 ($10,000) 1 ($10,000) 1 $1,300.00 0.8621 $1,121 2 $1,300.00 0.7432 $966 3 $1,550.00 0.6407 $993 3 $13,000 0.6407 $8,329 NPV $1,408 c) 2. Cash flow calculations and net present value On January 2, 20X1, Bruce Greene invested $10,000 in the stock market and purchased 5 Development, Inc. Heartland paid cash dividends of $2.60 per share in 20X1 and 20X2; t $3.10 per share in 20X3. On December 31, 20X3, Greene sold his holdings and generated Greene uses the net-present- value method and desires a 16% return on investments. a. Prepare a chronological list of the investment's cash flows. Note: Greene is entitled to b. Compute the investment's net present value, rounding calculations to the nearest dolla c. Given the results of part (b), should Greene have acquired the Heartland stock? Brief Yes, Greene should have acquired the Heartland stock since the investment has a positive NPV. This means that in discounting the cash inflows to their present value,
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positive NPV. This means that in discounting the cash inflows to their present value, there is a profit of $1,408.
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