MANAGERIAL ACCT-CONNECT W/PROCTORIO.ONLY
MANAGERIAL ACCT-CONNECT W/PROCTORIO.ONLY
17th Edition
ISBN: 9781265572297
Author: Garrison
Publisher: MCG
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Chapter 14, Problem 13F15

NPV is computed by deducting initial investment amount from the present value.

Project’s actual net present value will be calculated in the following way, when variable expenses changes to 45%:

Computation of annual cash inflow when variable expenses changed to 45%:

To determine

    Particulars Amount ($)
    Sales 2,735,000
    Less: Variable expenses 45% 1,230,750

    Contribution margin 1,504,250
    Less: Fixed expenses 735,000

    Earnings before depreciation, interest and taxes 769,250
    Less: Depreciation 595,000

    Earnings after depreciation or EBIT 174,250
    Add: Depreciation 595,000

    Annual cash inflow 769,250

Computation of actual net present value is required to be computed when variable expenses are changed to 45%.

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respond to ceasar  Companies make adjusting entries to ensure that their financial statements accurately reflect the true financial position and performance during a specific accounting period. These entries are necessary to account for revenues earned and expenses incurred that may not yet have been recorded in the books. Adjusting entries are typically made at the end of an accounting period, during the preparation of financial statements, as part of the accounting cycle. This step is crucial in aligning the company’s books with the accrual basis of accounting, where revenues and expenses are recognized when they are earned or incurred, rather than when cash is received or paid. By making these adjustments, companies can provide accurate and reliable financial information to stakeholders.

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