Josh purchased a new machine for his business. Josh expects to produce 80 products at P 100,000.00 per item in each of the first 3 years, after which it expects to produce 100 products per year at P 125,000.00 per item through year 8. If Josh's minimum attractive rate of return is 18% per year, what is the present worth of the expected revenue? Draw the cash flow diagram.
Josh purchased a new machine for his business. Josh expects to produce 80 products at P 100,000.00 per item in each of the first 3 years, after which it expects to produce 100 products per year at P 125,000.00 per item through year 8. If Josh's minimum attractive rate of return is 18% per year, what is the present worth of the expected revenue? Draw the cash flow diagram.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Josh purchased a new machine for his business. Josh expects to produce 80 products
at P 100,000.00 per item in each of the first 3 years, after which it expects to produce
100 products per year at P 125,000.00 per item through year 8. If Josh's minimum
attractive rate of return is 18% per year, what is the present worth of the expected
revenue? Draw the cash flow diagram.
Expert Solution

Step 1
Cash flow is the flow of cash in entity. There can be inflow or outflow of cash depending upon the event happening in the organization.
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