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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?

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    https://brainmass.com/business/discounted-cash-flows-model/present-value-warrant-209142

    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

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