# Monetary Return

You invest $100 (at time 0) and expect to receive $115 in cash in one year. Your required return is 9 percent.

a) Calculate the value of your investment at time 0 using discounted cash flow techniques.

b) Calculate the value of your investment using residual earnings techniques

c) Suppose that your accountant demanded that you expense $20 of your investment immediately such that the book value of the investment was $80 at time 0. Calculate the value of your investment under this accounting.

https://brainmass.com/business/discounted-cash-flows-model/monetary-return-287008

#### Solution Preview

(a) Value of Investment using DCF technique

Time 0 Cash Flow = -100

Time 1 Cash Flow = -115

Discount Rate = 9%

Value of Investment = -100+115/1.09 = $5.5 ...

#### Solution Summary

This solution provides a detailed step by step explanation of the given finance problem.

$2.19