Financial forecasting

Value of a mixed stream Harte Systems, Inc., a maker of electronic survillance equipment, is considering selling the rights to market its home security system to a well-known hardware chain. The proposed deal calls for the hardware chain to pay Harte $28 comma 000 and $23 comma 000 at the end of years 1 and 2 and to make annual year-end payments of $18 comma 000 in years 3 through 9. A final payment to Harte of $30 comma 000 would be due at the end of year 10. a.

Select the time line that represents the cash flows involved in the offer.

Prepare a forecast of your selected bank’s projected profitability (You forecast this!).

  • Assume that the Federal Reserve Board holds the interest rates “as is” or constant
  • Discuss the impact this constant interest rate would have on three years of your bank’s profitability

Solution:

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