Assume that Crusher Co. has several minor lawsuits outstanding. To determine the amount of liability to recognize on the statement of financial position, Crusher decides to use expected cash flow techniques. Based on discussions with their lawyers, Crusher has developed the following cash flow estimates, and related probabilities: Year Cash Flow Estimate Probability Assessment 2021 $2,300 30% $4,500 45% $8,200 25% 2022 $3,200 20% $5,400 50% $7,100 30% Required: 1) Based on these estimates, and assuming a risk-free rate of 5%, what is the present value of expected cash flows that Crusher should record on their statement of financial position for 2021?

Assume that Crusher Co. has several minor lawsuits outstanding. To determine the amount of liability to recognize on the statement of financial position, Crusher decides to use expected cash flow techniques. Based on discussions with their lawyers, Crusher has developed the following cash flow estimates, and related probabilities: Year Cash Flow Estimate Probability Assessment 2021 $2,300 30% $4,500 45% $8,200 25% 2022 $3,200 20% $5,400 50% $7,100 30% Required: 1) Based on these estimates, and assuming a risk-free rate of 5%, what is the present value of expected cash flows that Crusher should record on their statement of financial position for 2021?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 2MAD

See similar textbooks

Year	Cash Flow Estimate	Probability Assessment
2021	$2,300	30%
	$4,500	45%
	$8,200	25%
2022	$3,200	20%
	$5,400	50%
	$7,100	30%

Similar questions

Current Attempt in Progress Sandhill's Auto has several minor lawsuits outstanding. To determine the amount of liability to recognize on the December 31, 2022, statement of financial position, Sandhill's Auto decides to use expected cash flow techniques. Based on discussions with the company's lawyers, Sandhill's Auto estimates the expected cash outflows associated with the lawsuits at the end of each year, as shown below. Cash Flow x Estimate Probability Assessment = Expected Cash Flow 2023 $3,800 20% $760 6,400 50% 3,200 7,300 30% 2,190 Total $6,150
Use a Sensitivity Analysis to Adjust Cash Flows in NPV Refer to the data provided below for Proposal A and also provided in an Excel file in this link to answer the following questions. Proposal A Initial investment $100,000 Cash flow from operations Year 1 60,000 Year 2 40,000 Year 3 35,000 Disinvestment Life (years) 3 12% Discount rate (for all proposals) a. Prepare a table in Excel to compute the net present value for Proposal A and consider this the likely scenario. Next, prepare an optimistic and pessimistic scenario. For the optimistic scenario, increase each cash inflow by 10% and for the pessimistic scenario, decrease each net cash inflow by 10%.
get the answer as per posiblity
Choose the correct answer with solution. Pls choose only the answer in the choices. Q1. How much is the net cash flow of Gising Company in Year 1?a. 390,000b. 290,000c. 220,000d. 140,000Q2. How much is the terminal value recognized after the three-year forecast period?a. 10,880,000b. 12,466,667c. 13,090,000d. 10,880,000Q3. What is the net Cash flow to the Firm?a. 11,140,489b. 12,103,272c. 12,808,412d. 13,974,000Q4. What is the net cash flow to equity?a. 10,140,489b. 11,103, 272c. 11, 140, 489d. 12, 103, 272
Please solve step by step for clarity, thank you!
provide the answer
Please do not give solution in image format thanku
A 165. Subject:- finance
Which of the following situations is a cash outflow? Question 8 options: Bank Loan balance in 2019 is $20,000 and in 2018 was $10,000 Mortgage balance in 2019 is $30,000 and in 2018 was $25,000 Equipment balance in 2019 is $30,000 and in 2018 was $5,000 Building balance in 2019 is $140,000 and in 2018 was $150,000
please answer in text form and in proper format answer with must explanation , calculation for each part and steps clearly
Mendez Company has identified an investment project with the following cash flows. Year 1234 Cash Flow $ 1,170 1,060 1,530 1,890 a. If the discount rate is 12 percent, what is the present value of these cash flows? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. What is the present value at 15 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What is the present value at 21 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. a. Present value at 12 percent b. Present value at 15 percent c. Present value at 21 percent
Fransico Ltd. is trying to determine which of three projects it wants to invest in. All three projects have been analyzed into Net Present Value amounts. (Round your answers to two decimal places when needed and use rounded answers for all future calculations). 1. Calculate the Net Present Value based on the following information: Cash Flows Project 2 Project 6 Project 12 Present Value of net cash inflows $491,900 $778,300 $503,700 Initial InvestmentSingle line $146,000Single line $407,400Single line $206,400Single line Single lineNet Present ValueDouble line Single lineDouble line Single lineDouble line Single lineDouble line 2. Calculate the Profitability Index for each of the projects. Round to two decimal places. Project Present value of net cash inflows / Initial Investment = Profitability Index 2 / = 6 / = 12 / = 3. Based on the Profitability Index, which project should be selected?