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Ambrin Corp. expects to receive $5000 per year for 10 years and $6500 per year for...

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Finance

Ambrin Corp. expects to receive $5000 per year for 10 years and$6500 per year for the next 10 years. What is the present value ofthis 20 year cash flow? Use an 12% discount rate. Use Appendix Dand Appendix B to calculate the answer. (Round yourintermediate calculations to the nearest dollarvalue.)

Options below:

$40,076

$64,975

$48,550.5

none of these

Answer & Explanation Solved by verified expert
3.8 Ratings (484 Votes)

Calculation of present value:
Time Cashflow PVF @12% PV
1 5000                                 0.8929                                     4,464.29
2 5000                                 0.7972                                     3,985.97
3 5000                                 0.7118                                     3,558.90
4 5000                                 0.6355                                     3,177.59
5 5000                                 0.5674                                     2,837.13
6 5000                                 0.5066                                     2,533.16
7 5000                                 0.4523                                     2,261.75
8 5000                                 0.4039                                     2,019.42
9 5000                                 0.3606                                     1,803.05
10 5000                                 0.3220                                     1,609.87
11 6500                                 0.2875                                     1,868.59
12 6500                                 0.2567                                     1,668.39
13 6500                                 0.2292                                     1,489.63
14 6500                                 0.2046                                     1,330.03
15 6500                                 0.1827                                     1,187.53
16 6500                                 0.1631                                     1,060.29
17 6500                                 0.1456                                         946.69
18 6500                                 0.1300                                         845.26
19 6500                                 0.1161                                         754.69
20 6500                                 0.1037                                         673.83
NPV                                   40,076.05
So correct answer is $40076

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Ambrin Corp. expects to receive $5000 per year for 10 years and$6500 per year for the next 10 years. What is the present value ofthis 20 year cash flow? Use an 12% discount rate. Use Appendix Dand Appendix B to calculate the answer. (Round yourintermediate calculations to the nearest dollarvalue.)Options below:$40,076$64,975$48,550.5none of these

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