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# Corporate Finance

Practice Exercises:
1. What is the present value of the following cash-flow stream if the interest rate is 6 percent?

Year Cash Flow
1 \$200
2 \$400
3 \$300

2. The only capital investment required for a small project is investment in inventory. Profits this year were \$10,000, and inventory increased from \$4,000 to \$5,000. What was the cash flow from the project?

3. A firm's balance sheets for year-end 2006 and 2007 contain the following data. What happened to investment in net working capital during 2007? All items are in millions of dollars.

#### Solution Preview

Practice Exercises:
1. What is the present value of the following cash-flow stream if the interest rate is 6 percent?

Year Cash Flow
1 \$200
2 \$400
3 \$300

Present value = 200/(1.06) + 400/(1.06)2 + 300/(1.06)3
Present value = 188.68 + 356.00 + 251.89
Present ...

#### Solution Summary

This solution is comprised of a detailed explanation to answer what is the present value of the following cash-flow stream if the interest rate is 6 percent.

\$2.19