Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
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Chapter A3, Problem 22E
Future Value of a Single
Jenkins Products has just been paid $25,000 by Shirley Enterprises, which has owed Jenkins this amount for 30 months but been unable to pay because of financial difficulties. Had it been able to invest this cash, Jenkins assumes that it would have earned an interest rate of 12% compounded monthly (1% per month).
Required:
Note: Round answers to two decimal places.
1. Prepare a cash flow diagram for the investment that could have been made if Shirley had paid 30 months ago.
2. Determine how much Jenkins has lost by not receiving the $25.000 when it was due 30 months ago.
3. CONCEPTUAL CONNECTION Indicate whether Jenkins would make an entry to account for this loss. Why or why not?
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Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Period answer to 2 decimal place.)
Brans Co. is considering a $270,000 investment, which will provide net returns of $110,000, $140,000,
and $220,000 in the second, third, and fourth yearS, respectively.
The company has a payback rule of 3 years. Should the company undertake the investment?
Use the following table:
Cumulative Cash
Flow
Cash
Cash
Net Cash
Year
Outflow
Inflow
Flow
a. No
O b. Yes
Chapter A3 Solutions
Cornerstones of Financial Accounting
Ch. A3 - Prob. 1DQCh. A3 - Prob. 2DQCh. A3 - Prob. 3DQCh. A3 - Prob. 4DQCh. A3 - Prob. 5DQCh. A3 - Prob. 1CECh. A3 - Prob. 2CECh. A3 - Prob. 3CECh. A3 - Prob. 4CECh. A3 - Prob. 5CE
Ch. A3 - Use Future Value and Present Value Tables to Apply...Ch. A3 - Prob. 7CECh. A3 - Prob. 8CECh. A3 - Prob. 9CECh. A3 - Prob. 10CECh. A3 - Prob. 11ECh. A3 - Prob. 12ECh. A3 - Prob. 13ECh. A3 - Future Values and Long-Term Investments Portman...Ch. A3 - Prob. 15ECh. A3 - Prob. 16ECh. A3 - Prob. 17ECh. A3 - Present Values Phillips Enterprises signed notes...Ch. A3 - Present Values Krista Kellman has an opportunity...Ch. A3 - Prob. 20ECh. A3 - Prob. 21ECh. A3 - Future Value of a Single Cash Flow Jenkins...Ch. A3 - Prob. 23ECh. A3 - Installment Sale Baileys Billiards sold a pool...
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