1. Your finance text book sold 53,250 copies in its first year. The publishing c

Question

1. Your finance text book sold 53,250 copies in its first year. The publishing company expects the sales to grow at a rate of 20 percent for the next three years, and by 10 percent in the fourth year. Calculate the total number of copies that the publisher expects to sell in year 3 and 4. (Number of copies sold after 3 years?) (Number of copies sold in the 4th year?)

2.Trigen Corp. management will invest cash flows of $331,000, $616,450, $212,775, $818,400, $1,239,644, and $1,617,848 in research and development over the next six years. If the appropriate interest rate is 6.75 percent, what is the future value of these investment cash flows six years from today? (round 2 dec. places)

3. You wrote a piece of software that does a better job of allowing computers to network than any other program designed for this purpose. A large networking company wants to incorporate your software into their systems and is offering to pay you $500,000 today, plus $500,000 at the end of each of the following six years for permission to do this. If the appropriate interest rate is 6 percent, what is the present value of the cash flow stream that the company is offering you? (round to nearest whole dollar)

Explanation / Answer

1) Copies to be sold in year 3 = 53250*1.20^3 = 92016

Copies to be sold in eyar 4 = 92016 * 1.10 = 101218

2) Future value = 331000 * 1.0675^5 + 616450*1.0675^4 + 212775*1.0675^3 + 818400*1.0675^2 + 1239644*1.0675 + 1617848

= 5391,977.89

3) Present value = 500000 + 500000 * (1-(1+.06)^-6)/.06

= 2958,662.16

=

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.