MANAGERIAL ACCOUNTING F/MGRS.
6th Edition
ISBN: 9781264100590
Author: Noreen
Publisher: RENT MCG
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Chapter 7A, Problem 7A.1E
To determine
Concept Introduction:
The
the present value of cash inflows for each investment.
Expert Solution & Answer
Answer to Problem 7A.1E
The present value of cash inflows for each investment is as follows:
Investment A =$ 18,519
Investment B =$ 21,832
Explanation of Solution
The present value of cash inflows for each investment is calculated as follows:
| Investment A | Investment B | |||||
| PVF (18%) | PV | Cash inflow | PV | |||
| A | B | C=A*B | D | E=A*D | ||
| Year 1 | 0.84746 | $ 3,000 | $ 2,542 | $ 12,000 | $ 10,169 | |
| Year 2 | 0.71818 | $ 6,000 | $ 4,309 | $ 9,000 | $ 6,464 | |
| Year 3 | 0.60863 | $ 9,000 | $ 5,478 | $ 6,000 | $ 3,652 | |
| Year 4 | 0.51579 | $ 12,000 | $ 6,189 | $ 3,000 | $ 1,547 | |
| Present value of cash inflow | $ 18,519 | $ 21,832 | ||||
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Students have asked these similar questions
You are asked to evaluate an investment project with the following cash flows:
Year
1
234.
2
4
Cash Flow
$800
1,090
1,350
1,475
a. If the discount rate is 7 percent, what is the present value of these cash flows? (Do
not round intermediate calculations and round your answer to 2 decimal places,
e.g., 32.16.)
b. What is the present value at 17 percent? (Do not round intermediate calculations
and round your answer to 2 decimal places, e.g., 32.16.)
c. What is the present value at 25 percent? (Do not round intermediate calculations
and round your answer to 2 decimal places, e.g., 32.16.)
a. Present value at 7%
b. Present value at 17%
c. Present value at 25%
$
3,926.98
Ay 3.
Pls show proper steps
Chapter 7A Solutions
MANAGERIAL ACCOUNTING F/MGRS.
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