The owners of Blossom de Trois-Rivières hockey club are considering a deal with an older, established club whereby they can acquirethe services of Pierre Pharoah, a very high scorer and great gate attraction, in exchange for Kenneth Garcia (currently paid $17,550annually). The established club would also receive $585,000 cash from Blossom. The owners' accountants have assembled thefollowing data:Estimated useful life of PharoahEstimated residual value of PharoahEstimated useful life of GarciaEstimated residual value of GarciaCurrent cash offer for Garcia received from another clubApplicable desired rate of returnOther information:Year12345Pharoah's Salary$70,20081,90093,60093,60084.240Click here to view the factor table.The hockey clubAdditional GateReceipts Because of PharoahNet present value $$386,100351,000234,000117,00046,8005 years$23,4005 yearsNone$58,50010%Additional Expenses ofHandling Higher Volume$38,61035,100✓acquire the services of Pharoah.23,400Based on your analysis of the data, calculate the net present value of Pharoah's services. (For calculation purposes, use 5 decimal places asdisplayed in the factor table provided, e.g. 1.25124. If the net present value is negative, use either a negative sign preceding the number e.g. -45or parentheses e.g. (45).)11,700Recommend whether or not the club should acquire the services of Pierre Pharoah.4,680

The owners of Blossom de Trois-Rivières hockey club are considering a deal with an older, establ the services of Pierre Pharoah, a very high scorer and great gate attraction, in exchange for Ken annually). The established club would also receive $585,000 cash from Blossom. The owners' ac following data: Estimated useful life of Pharoah Estimated residual value of Pharoah Estimated useful life of Garcia Estimated residual value of Garcia Current cash offer for Garcia received from another club Applicable desired rate of return 5 years $23,400 5 years None $58,500 10%

The owners of Blossom de Trois-Rivières hockey club are considering a deal with an older, establ the services of Pierre Pharoah, a very high scorer and great gate attraction, in exchange for Ken annually). The established club would also receive $585,000 cash from Blossom. The owners' ac following data: Estimated useful life of Pharoah Estimated residual value of Pharoah Estimated useful life of Garcia Estimated residual value of Garcia Current cash offer for Garcia received from another club Applicable desired rate of return 5 years $23,400 5 years None $58,500 10%

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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