Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. carla vista inc., management is expecting a new pr

Carla Vista Inc., management is expecting a new project to start paying off, beginning at the...

Free

90.2K

Verified Solution

Question

Finance

Carla Vista Inc., management is expecting a new project to startpaying off, beginning at the end of next year. Cash flows areexpected to be as follows:

012345
$421,676$469,452$482,455$465,326$527,444


If Carla Vista can reinvest these cash flows to earn a return of7.9 percent, what is the future value of this cash flow stream atthe end of 5 years? What is its present value? (Roundanswers to 2 decimal places, e.g. 52.75.)

Answer & Explanation Solved by verified expert
4.1 Ratings (503 Votes)

a. Future value of cash flows $ 27,52,521.51
Working;
Year Cash flow Future value of 1 Future value of cash flow
a b c=1.079^(5-a) d=b*c
1 $       4,21,676      1.3555 $    5,71,563.73
2 $       4,69,452      1.2562 $    5,89,733.13
3 $       4,82,455      1.1642 $    5,61,693.89
4 $       4,65,326      1.0790 $    5,02,086.75
5 $       5,27,444      1.0000 $    5,27,444.00
Total $ 27,52,521.51
b. Present value of cash flows $ 18,82,016.81
Working;
Year Cash flow Present value of 1 Present value of cash flow
a b c=1.079^-a d=b*c
1 $       4,21,676      0.9268 $    3,90,802.59
2 $       4,69,452      0.8589 $    4,03,225.79
3 $       4,82,455      0.7960 $    3,84,054.16
4 $       4,65,326      0.7378 $    3,43,298.21
5 $       5,27,444      0.6837 $    3,60,636.05
Total $ 18,82,016.81

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

Carla Vista Inc., management is expecting a new project to startpaying off, beginning at the end of next year. Cash flows areexpected to be as follows:012345$421,676$469,452$482,455$465,326$527,444If Carla Vista can reinvest these cash flows to earn a return of7.9 percent, what is the future value of this cash flow stream atthe end of 5 years? What is its present value? (Roundanswers to 2 decimal places, e.g. 52.75.)

Other questions asked by students

Q

Students will be asked to formulate, define, and interpret mathematical modeling (particularly ordinary differential equation) which involves...

Advance Math
Q

Illustration 38 If a luminous point is moving at a speed vo towards spherical mirror...

Physics
Q

1 A ship of 5600 tonnes displacement is floating upright A weight of 30 tonnes...

Physics
Q

Six moles of an ideal gas perfomrs a cycle shown in figure If the temperature...

Physics
Q

The following transactions and events affecting Canning County Gencral Fund took place during...

Accounting
Q

What is the accured wages and the unearned revenue

Accounting
Q

Required information [The following information applies to the questions displayed below] Rondo and his business...

Accounting
Q

The following trial balance of Rich Macker Tutoring Service as of May 31, 2024, does...

Accounting
Q

Required information Problem 9-4A Estimating warranty expense and liability LO P4 [The following information applies...

Accounting
Q

Required information [The following information applies to the questions displayed below Westerville Company reported the...

Accounting
Q

For the current year, Electric Corporation expected to sell 42,000 industrial power cords. Fixed costs...

Accounting
Q

QUESTION 4 The expected return on the market is 15.49%, the risk free rate is...

Finance