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# Present Value, Warrant

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1. Ambrin Corp. expects to receive \$2,000 per year for 10 years and \$3,500 per year for the next 10 years. What is the present value of this cash flow? Use an 11% discount rate

2. The intrinsic value of a warrant to buy 5 share of Merton stock at \$55 per share is \$20. What is the current market price of Merton Stock?

#### Solution Preview

Note:

PVIF= Present Value Interest Factor
PVIFA= Present Value Interest Factor for an Annuity
They can be read from tables or calculated using the following equations
PVIF( n, r%)= =1/(1+r%)^n
PVIFA( n, r%)= =[1-1/(1+r%)^n]/r%

1. Ambrin Corp. expects to receive \$2,000 per year for 10 years and \$3,500 per year for the next 10 years.  What is the present value of this cash flow?  Use an 11% discount ...

#### Solution Summary

Calculates present value of cash flow and current market price of Stock given the intrinsic value of a warrant.

\$2.19