Finally, you would add up the future values of all the individual cash flows to determine the future value of the cash flow stream. 2. Explain how to calculate the present value of a stream of cash flows. To calculate the present value of a stream of cash flows, you should first draw a time line so that you can see that each cash flow is placed in its correct time period. Then you simply calculate the present value of each cash flow for its time period, and finally you add up all the present values.
The annual growth rate is I in the following equation: $1(1 + I)10 = $2. We can find I in the equation above as follows: Using a financial calculator input N = 10, PV = -1, PMT = 0, FV = 2, and I/YR = ? Solving for I/YR you obtain 7.18%. Viewed another way, if earnings had grown at the rate of 10% per year for 10 years, then EPS would have increased from $1.00 to $2.59, found as follows: Using a financial calculator, input N = 10, I/YR = 10, PV = -1, PMT = 0, and FV = ?. Solving for FV you obtain $2.59.
What was the previous day’s asked price? Ans. The coupon rate, located in the second column of the quote is 6.25%. The bid price is Bid price = 128:19 = 128.19/32 Bid price= (128.59375/100)*1000 =1285.9375 The previous days ask price is found by: Previous day’s asked price= Today’s asked price- change Previous day’s asked price=128.21/32-106/32 Previous day’s asked price=125.34375 The previous day’s price in dollor was: Previous day’s dollor price=(125.34375/100)*1000 =
TI-83 Plus Instructions 1. To calculate present value of uneven cash flow streams. You can use this method for even cash flow streams also. a. If you have i=10%, CF0= -1000, CF1=2000, CF3= 3000, CF3=5000 b.
Savings in purchasing cost: Annual demand: 800, 11.89*800 = $9512 per year. Holding cost will be higher, Extra storage, FOB, LT= 4weeks vs. 2 weeks. Sourcing and Procurement Slide 3 © Hu Lot Sizing Analysis D=800 H=20% C=$108.2 S= $75 ? Q0 2* D * S 2*(Annual Demand)*(Ordering cost) H (Annual Unit Holding Cost) QO = {2 * 800 * 75/ (108.2*0.2)} = 74.46, round up to 80, Then You order 10 times a year, you have 360/10=36 days inventory Do all of the EOQ assumptions hold here? Sourcing and Procurement Slide 4 © Hu 2
We used the capital asset pricing model along with a political risk premium and a country market risk, beta. The cash flow is presumed to increase by an average 1% per year vs. previous year, from 2.7 in 1998 to 5.9 in 2005, and decrease to 4% by 2004, for each country; the discount was calculated at the local required rates of return. Was considered also the differences in inflation rates across countries and the estimation of forward exchange rates using parity conditions. (Schedule 6). 3.
CASE: Federal Express (B) Read the case and answer these questions as briefly as you can: 1. Where in Geoffrey Moore category life cycle is the Federal Express courier pack at the time of this case’s writing? Why (no more than 3 reasons)? Federal Express falls in the Growth Market quadrant in Moore’s category life cycle. The Growth Market quadrant is defined as a period in the development of a market when growth rates are significantly in excess of 10 percent.
Located on page 304, problem #90 states, “P dollars is invested at annual interest rate r for 1 year. If the interest is compounded the polynomial P(1+r/2)2 represents the value of the investment after 1 year.” (Dugopolski, 2012, p.304) For the first part rewrite the expression without parenthesis. This would require the use of FOIL, which means multiply First, Outer, Inner, Last. Do this to the binomial (1+r/2)2 and then multiply all of the terms by P. The following is an example: P(1+r/2)2 This is the original expression with the exponent ONLY with the binomial. P(1+r/2)(1+r/2) Next step is to multiply the squared quantity.
The depreciating expense is $5000 each year with a tax rate of 25% and discount rate of 10%. These numbers were crucial in finding the NPV (net present value) and IRR (internal rate of return). Corporation “A” had a $100,000 operating revenue and I had to first figure out earnings before interest and tax so I could come out with taxes owed. By deducting cash expenses and depreciation I came up with the EBIT in which now I just multiplied by 25% tax rate. Now by deducting the EBIT I can figure out the net earnings and adding the depreciation back I got the C.F.
What should Excellent do? Hint: Convert all costs and revenues to present values using the cost of capital as the interest rate (e.g. the present value of $2 million per year perpetually is $2/.1 = $20 million). B. Market Research Option Excellent Manufacturing has to decide whether to spend money on market research to find out the level of demand.