Answered: EOY A001 B002 C003 0 -$210 -S110 -$160…

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EOY A001 B002 C003 0 -$210 -S110 -$160 1 $80 $60 $80 $90 $60 $80 $100 $60 $80 4 $110 $70 $80 2. 3.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Risk Management Techniques

Risk management is the procedure of recognizing, analyzing, monitoring, and preventing the risks and threatening factors of investments and business. Risks can arise from various factors including internal controls, market changes, natural disasters, and failure in productions. Risk management techniques enable entities to control and minimize the risks as well as the threatening factors of the business and it also helps to improve the business.

Question

Xanadu Mining is considering three mutually exclusive alternatives. Cash flows, measured in thousands of dollars, are shown in the table below. MARR is 10%/year. Solve, a. What is the future worth of each alternative? b. Which alternative should be recommended?

EOY A001 B002 C003
0 -$210 -S110 -$160
1
$80
$60
$80
$90
$60
$80
$100
$60
$80
4
$110
$70
$80
2.
3.

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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