Net present value
Not what you're looking for?
An aircraft company has signed a contract to sell a plane for $20 million. The firm buying the
plane will pay for it in 5 annual payments (at year end) of $4 million. If the firm's cost of capital is 6%, what is the net present value of this payment?
Purchase this Solution
Solution Summary
The solution explains how to calculate the net present value of the payment.
Solution Preview
The payments are an annuity. The Present Value (PV) of an annuity is calculated as
PV = PMT [(1 ...
Purchase this Solution
Free BrainMass Quizzes
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Basic Social Media Concepts
The quiz will test your knowledge on basic social media concepts.
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.