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1. XYZ has decided to join a national franchise. Annual year-end cash flow is expected to increase by $10,000. At a 12 percent effective required return, what is the value of the franchise affiliation?

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1. XYZ has decided to join a national franchise. Annual year-end cash flow is expected to increase by $10,000. At a 12 percent effective required return, what is the value of the franchise affiliation?

2. XYZ purchased new 20-year 6% bonds of BMC Corporation for $100,000 each when they were issued two years ago. Interest rates on investments of this type have fallen to 5% since then. What is the value of these bonds today?

3. An asset will generate cash flows of $250,000 a year for 10 years, with cash flow
spread evenly over the year. At a 12% effective required return, what is the value of asset?

4. XYZ is considering a new business development program. Anticipated benefits are $200,000 in the first year, $250,000 in second year, and $400,000 in the third year. Benefits will decline 10 percent a year after the third year, and will end after the tenth year. Assume these benefits are received at year-end. The effective required returned return is 10 percent. What is the present value of these benefits? If the development program requires an initial outlay of $500,000, what is the net present value?

5. The manager at XYZ proposed a portable service unit requiring an initial outlay of $100,000 and providing the following year-end cash flows:

Year 1 2 3 4 5
Cash Flows $30,000 -$50,000 $70,000 $60,000 $50,00

At a 10 percent required return, find the net present value, the profitability index, the payback period and present value payback period. Interpret these measures for a manager who is not trained in finance.

Assume you intend to retire 25 years from today. During your retirement years you need to have an annual income flow of $86,000 per year for

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Assume you intend to retire 25 years from today. During your retirement years you need to have an annual income flow of $86,000 per year for 15 years with the amount occurring exactly 25 years from today. On the 15th year of retirement, in addition to the lump sum, you need an additional $150,000 for miscellaneous purposes. You currently have $10,000 saved for retirement. Assume you have a discount rate of 14%, calculate the equal annual deposits that you must make for the next 25 years( with the first deposit occurring one year from today) to achieve your desired retirement flow.

What is the present value of:

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What is the present value of:
a. $8,000 in 10 years at 6 percent?
b. $16,000 in 5 years at 12 percent?
c. $25,000 in 15 years at 8 percent?
d. $1,000 in 40 periods at 20 percent?

Beverly started a paper route on January 1, 1995. Every three months, she deposits $300 in her bank account,

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Beverly started a paper route on January 1, 1995. Every three months, she deposits $300 in her bank account, which earns 8 percent annually but is compounded quarterly. On December 31,1998, she used the entire balance in her bank account to invest in a certificate of deposit at 12 percent annually. How much will she have on December 31, 2001?

How do i compute the PRESENT VALUE of a$100 cash flow for the following combinations of discount rates and times?

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How do i compute the PRESENT VALUE of a$100 cash flow for the following combinations of discount rates and times?
a. r=8 percent t= 10 years
b. r=8 percent t= 20 years
c. r=4 percent t=10 years
d. r=4 percent t=20 years

And how do I compute the FUTURE VALUE for a $100 cash flow for the same combination of rates and times as in the above problem?

I am not familiar with all of the abbreviations (for example the r means rate) if there are more abbreviations can you help me with the meaning?

Also how do I find the Interest rate implied by the following combinations of PRESENT and FUTURE VALUE?

PRESENT VALUE YEARS FUTURE VALUE

$400 11 $684
$183 4 $249
$300 7 $300

And how do I find the NUMBER OF PERIODS, how long will it take for $400 to grow to $1,000 at the interest rate specified?

a. 4 percent
b. 8 percent
c. 16 percent

Your help is GREATLY appreciated Thank you !!!

 
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