Annual Percentage Rate and Decimal Places Essay

b.What are the amounts and timing of the acquisition investment’s free cash flow from 2013 through 2022?

Poor Dog, Inc. borrowed $135,000 from the bank today. They must repay this money over the next six years by making monthly payments of $2,215.10. What is the interest rate on the loan? Express your answer with annual compounding.

13. What is the formula for the Present Value (PV) for a finite stream of cash flows (1 per year) that lasts for 10 years?

8. What is the net present value of the following cash flows discounted at 12%?

Therefore the annual interest rate is 8% and the effective annual rate compounded quarterly is 8.24%

income is $26.03 for year 1. Similarly, the present value of the firm at time 1 is

9. You want to purchase a business with the following cash flows. How much would you pay for this business today assuming you needed a 14% return to make this deal?

12. Today, you deposit $10,750 in a bank account that pays 3 percent simple interest. How much interest will you earn over the next 7 years?

Question3: How do you feel timely and accurate calculations of future cash flows would help your financial position? Are there any other decisions it would impact?

* Existing assets with current book value of $6 mm. These assets will generate cash flows of either $8 mm or $8.8 mm next year, depending on whether the economy is in a recession or a boom.

1. Assume that you are given a set of cash flows on a time line and asked to find their present

The first issue which needs to be addressed is to perform a monthly cash flow analysis for the fiscal year ending December 31st, 1990. Robert & Alex would like to open up their own restaurant/brew pub with $200,000 of their own money and with the use of external financing to finance the rest of the company until excess cash flows remain stable and positive.

iii. Prepare a basic discounted cash flow analysis; i.e. compute incremental cash flows and a terminal value, and discount them at a weighted average cost of capital. Can you do a multiples-type analysis here as well?

After the calculations you end up coming out with a rate of 14.87%. The third and final part of question three asks what rate you will need if the interest is compounded semiannually. All you have to do is double the amount of terms and you will come out with a lower number of 7.177%. Since the interest is compounded semiannually that means that you will need to times that number by two and you come out with your final number of 14.35%.

The semi-annual compounded interest rate is 5.2% (a six-month discount rate of 5.2/2 = 2.6%). (15 points)