Valuation of assets Using the information provided in the following table, find
ID: 2637959 • Letter: V
Question
Valuation of assets Using the information provided in the following table, find the
value of each asset.
Cash flow
Asset End of year Amount Appropriate required return
A 1 $ 5,000 18%
2 5,000
3 5,000
B 1 through infinity` $ 300 15%
C 1 $ 0 16%
2 0
3 0
4 0
5 35,000
D 1 through 5 $ 1,500 12%
6 8,500
E 1 $ 2,000 14%
2 3,000
3 5,000
4 7,000
5 4,000
6 1,000
Please show how to calculate.
Explanation / Answer
Asset A
Value = 5,000 * PVAF(18%,3 YEARS) = $10,871.36
Asset B
VAlue = 300 / 15% = $2,000
Asset C
Value = 35,000 * PVF(16%,5 YEARS) = $16,663.96
Asset D
Value = 1,500 * PVAF(12%,5 YEARS) + 8,500 * PVF(12%,6 YEAR) = $9,713.53
Asset E
YEAR CASH FLOW DF@14% PRESENT VALUE
1 2,000 0.877 1,754
2 3,000 0.769 2,307
3 5,000 0.675 3,375
4 7,000 0.592 4,144
5 4,000 0.519 2,076
6 1,000 0.455 455
TOTAL = $14,111
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