Computing the present value of business


1) You are presented the investment in local business for= $500,000, and told that business can be sold after 1 year. After-tax cash flow from sale of business is evaluated to be=$600,000. If opportunity cost of capital is 14%, compute the present value of business (net of original cash outflow of= $500,000 today)?

2) Compute the given investments accrued to (i.e., the future value (FV) of each)?

a) $6,000 invested for 10 years at 10% compounded annually.

b) $8,000 invested for 5 years at 5% compounded annually.

c) $500 invested for 7 years at 8% compounded quarterly.

d) $10,000 invested for total 6 years at 6% compounded semi-annually for first four years followed by 12% compounded quarterly for final 2 years.

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Finance Basics: Computing the present value of business
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