What would have been the present value of the cash flows if

Assignment Help Accounting Basics
Reference no: EM13567211

1.The following data have been gathered for a capital investment decision.

Cash inflows:

Year 1

$50,000

Year 2

60,000

Year 3

40,000

Year 4

50,000

Year 5

40,000

The minimum rate of return for this investment is 14 percent. The present value factors for a 14 percent discount rate are as follows:

End of Period

Present Value of $1

Present Value of an Annuity of $1

1

.877

.877

2

.769

1.646

3

.675

2.321

4

.592

2.913

5

.519

3.432

6

.456

3.888

a.Compute the present value of each of the cash inflows of the investment.

b.What would have been the present value of the cash flows if they were received in equal installments over the five-year period at the same discount rate? (Assume the total cash inflows remain same.)

c.If the answers to parts (a) and (b) differ, explain the reason(s) why.

Reference no: EM13567211

Questions Cloud

Assume russell drove 1360 miles last month without making : russell preston delivers parts for several local auto parts stores. he charges clients 0.75 per mile driven. russell
Please interpretation and analysis the play romeo and : drama analysis essayplease interpretation and analysis the play romeo and juliet by william shakespeare. do not find
What is the yield on 1-year treasury bills for dell using : what is the yield on 1-year treasury bills for dell? using the historical equity risk premium at about 7 what is the
Because the weighted average given is always correct in our : because the weighted average given is always correct in our examples the measure of a required return why do firms not
What would have been the present value of the cash flows if : 1.the following data have been gathered for a capital investment decision.cash inflowsyear 150000year 260000year
Batista corporation has been incorporated for 30 years its : batista corporation has been incorporated for 30 years. its current paid-in capital is shown to the right. batista has
If the after-tax net cash inflow from these operations : sales of the kotter company during the past year were all cash sales. similarly all expenses were paid in cash. the
What is the the relationship of dell and its oems around : what is the the relationship of dell and its oems around world? why companies in computer hardware industry exemplified
The standard overhead rates are 1500 per direct labor hour : nexus star inc. produces various kinds of oils. one of its product product x is made from castor oil beeswax aloe vera

Reviews

Write a Review

Accounting Basics Questions & Answers

  Question regarding enviro company

Enviro Company issues 8%, 10 year bonds with a par value of$250,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 87 1/2. The straight-line method is used to al..

  Michelle is an employee who must use her personal

michelle is an employee who must use her personal automobile for employment-related business trips. during the current

  Employer-sponsored qualified retirement plan

How much can Nick deduct if he is not covered by an employer-sponsored qualified retirement plan - how much can Nick deduct if he is covered by an employer-sponsored qualified retirement plan?

  Their combined gross income for 2012 was 21500 they had a

drew and meg ages 40 and 41 respectively are married and file a joint return. in addiiton to four dependent children

  Method of overhead allocation

If, instead, the company used a predetermined annual overhead rate, what would be its cost per case? What would be the factory overhead cost component of finished goods inventory? Discuss which method of overhead allocation is preferable.

  Investigating the purchase of atm machines

Prepare the cost of goods sold budget, you must calculate a unit cost for each month. You must also calculate cost of goods manufactured. Remember, there is no Work in Process inventory but you must calculate direct materials used.

  What are examples of irregular items how does a change in

what are examples of irregular items? how does a change in accounting principles affect the financial statements? who

  Kellys boutique nbspcash budgetsee the attachment for full

kellys boutique nbspcash budgetsee the attachment for full information about nbspkellys boutiquenbspattachment- unit 7

  What is the dollar value of the ending inventory

A company manufactures a single product. During year 2012, a total of 20,000 units of this product were produced and 15,000 units were sold. The sales price was $20.00 per unit.

  Explain how the perpetual and periodic inventory systems

explain how the perpetual and periodic inventory systems differ especially in determining cost of goods sold and ending

  Basics of earnings per share computation

On December 31, 2010, Albacore Company had 300,000 shares of common stock issued and outstanding. Albacore issued a 10% stock dividend on June 30, 2011. On September 30, 2011, 12,000 shares of common stock were reacquired as treasury stock. What i..

  Company purchasing supplies

O'Connor Company purchased supplies totaling $21,600. By year end, $9,300 of supplies were still on hand. How much supplies expense should O'Connor recognize?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd