Financial Management: Theory & Practice
16th Edition
ISBN: 9781337909730
Author: Brigham
Publisher: Cengage
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Chapter 7, Problem 4MC
Suppose the
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What factor notation will convert a gradient cash flow ending at t= 8, to a future value? If the effective interest rate is 10%, what is the numeric factor that will convert the gradient to a future value.
The present value of a future cash flow is computed by multiplying the future cash flow value with the:
O discounting factor.
O number of periods.
O compounding factor.
O interest rate.
Which of the following is true about present value calculations?
Other things remaining equal, the present value of a future cash flow decreases if the investment time period increases.
Other things remaining equal, the present value of a future cash flow increases if the investment time period increases.
Chapter 7 Solutions
Financial Management: Theory & Practice
Ch. 7 - Two investors are evaluating General Electric’s...Ch. 7 - A bond that pays interest forever and has no...Ch. 7 - Explain how to use the free cash flow valuation...Ch. 7 - Ogier Incorporated currently has $800 million in...Ch. 7 - EMC Corporations current free cash flow is 400,000...Ch. 7 - Prob. 3PCh. 7 - JenBritt Incorporated had a free cash flow (FCF)...Ch. 7 - Blunderbluss Manufacturing’s balance sheets report...Ch. 7 - Thress Industries just paid a dividend of $1.50 a...Ch. 7 - Boehm Incorporated is expected to pay a 1.50 per...
Ch. 7 - Woidtke Manufacturing’s stock currently sells for...Ch. 7 - A company currently pays a dividend of $2 per...Ch. 7 - Nick’s Enchiladas has preferred stock outstanding...Ch. 7 - Brook Corporation’s free cash flow for the current...Ch. 7 - Kendra Enterprises has never paid a dividend. Free...Ch. 7 - Dozier Corporation is a fast-growing supplier of...Ch. 7 - Brushy Mountain Mining Companys coal reserves are...Ch. 7 - Prob. 15PCh. 7 - Crisp Cookware’s common stock is expected to pay a...Ch. 7 - Prob. 17PCh. 7 - Assume that the average firm in C&J Corporation’s...Ch. 7 - Simpkins Corporation does not pay any dividends...Ch. 7 - Several years ago, Rolen Riders issued preferred...Ch. 7 - You buy a share of The Ludwig Corporation stock...Ch. 7 - You are analyzing Jillians Jewelry (JJ) stock for...Ch. 7 - Reizenstein Technologies (RT) has just developed a...Ch. 7 - Conroy Consulting Corporation (CCC) has a current...Ch. 7 - Start with the partial model in the file Ch07 P25...Ch. 7 - Prob. 26SPCh. 7 - Start with the partial model in the file Ch07 P27...Ch. 7 - Describe briefly the legal rights and privileges...Ch. 7 - Prob. 2MCCh. 7 - Use a pie chart to illustrate the sources that...Ch. 7 - Suppose the free cash flow at Time 1 is expected...Ch. 7 - Use BMs data and the free cash flow valuation...Ch. 7 - You have just learned that B&M has undertaken a...Ch. 7 - Prob. 7MCCh. 7 - Prob. 8MCCh. 7 - Prob. 9MCCh. 7 - What is the horizon value at Year 4? What is the...Ch. 7 - Prob. 11MCCh. 7 - Prob. 14MCCh. 7 - Prob. 15MCCh. 7 - Assume that Temp Force is a constant growth...Ch. 7 - Prob. 17MCCh. 7 - Prob. 18MCCh. 7 - Prob. 19MCCh. 7 - Prob. 20MCCh. 7 - Prob. 21MC
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- Which of the following discounts future cash flows to their present value at the expected rate of return, and compares that to the Initial Investment? A. internal rate of return (IRR) method B. net present value (N PV) C. discounted cash flow model D. future value methodarrow_forwardCompute F so the following cash flows have a future worth of 0.arrow_forwardIf you disounted a set of positive real cash flows with a nominal discount rate and inflation were posotive, you would _______ the present value of those cash flowsarrow_forward
- Compute the payback period for an investment with the following net cash flows. (Round your answer to one decimal place.)arrow_forwardCertainty Equivalent Cash flow (CEQ) is obtained through converting the expected cash flows by a ______ shift of risk. If we discount the CEQ by the time value of money, we will have the present value _______ discounting future cash flow by time and risk discounting factor. Therefore, CEQ is always ______ than the expected cash flow. Find the correct choice to fill the blanks. A. time varying, same as, lowerB. constant, same as, lower C. time varying, higher than, lowerD. constant, same as, higherarrow_forwardThe present value of a future cash flow decreases as the annual interest rate decreases, all else held constant. answer : True or Falsearrow_forward
- we can still calculate the IRR on incremental cash flows. True or false? Explain with example?arrow_forwardTo calculate a terminal value, one divides the next period's cash flow by the spread between the and discount rate growth rate. a. variable; variable b. constant; variable c. variable; constant d. constant, constantarrow_forwardWhich figure of merit provides an interest rate at which the present value of the future cash flows equals the amount invested? a) NPV b) IRR c) Cap Rate d) DCF Please ensure accuracy and explain your choicearrow_forward
- For the cash flows shown and in preparation for a PW-based rate of return analysis, determine the incremental cash flow between machines B and Afor (a) year 0, (b) year 3, and (c) year 6.arrow_forwardConsider the accompanying cash flow series at varying interest rates. What is the equivalent present worth of the cash flow series?arrow_forwardThe rate of return that equates the present value of cash inflows and outflows is the: A. hurdle rate.B. desired rate of return.C. internal rate of return. D. minimum rate of return.arrow_forward
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