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