Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Financial Accounting Expert

You have been asked to support analysis of acquisition decisions involving net present value analysis.

problem 1: You are analyzing the net present value of a project over a 16 year period. Based on the rates in the textbook, what is the actual discount rate you would use given that your analysis must consider the effects of inflation/deflation?

Risk free rate + inflation rate - deflation rate + premium

problem 2: What is the present value of $25,000 that you will receive at the end of two years?

Now, assuming the following variables:

Risk free rate    3.8450%   
Inflation rate    2.0000%   
Premium           3.0000%   
Discount rate    8.8450%   
           
Cash flow         $25,000    
Period               2   
           
Present value    $  21,101.97    

problem 3: What is the present value of $2,000 a month over the next 3 years?

Cash flow                $2,000
Period                     36
       
Present value         $21,542.03

problem 4: Cash Flow Scenario: Lease. Annual payments of $50,000 paid at the beginning of each of the next five years (total of $250,000).  What is the NPV of all lease payments?

Annual payments    $50,000
Payment period       5

Present value        $212,538.64

problem 5: What is the net present value of a lease that requires you to pay $10,000 at the beginning of each year for the next five years and includes a provision for a rebate of $5,000 at eh end of Year 5?

Annual payments    $10,000    
Payment period       5   
Rebate                    $5,000    
           
Present value         $39,234.87     32507.73

problem 6: What is the net present value of an item that has a purchase price of $20,000, requires $1,000 maintenance at the end of each year except year 4, and is expected to have a salvage value of $1,000 at the end of the 5 year useful life?

Cash flow table:

Year    Item                    Cash flow      PV Factor    NPV

0        Purchase price    ($20,000)       1.0000     ($20,000)
1        Maintenance       ($1,000)         0.9187     ($919)
2        Maintenance       ($1,000)         0.8441     ($844)
3        Maintenance       ($1,000)         0.7755     ($775)
4        Salvage value     $5,000            0.6546     $3,273
                                                                           ($19,265)

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M93887

Have any Question? 


Related Questions in Financial Accounting

Fasbthe president of conglomerate corporation has

FASB The president of Conglomerate Corporation has instructed you, the Controller, to report quarterly profits within 2% of the projected budget and those figures will be reported to all stakeholders. Use the attachment ...

Assignmentthe assignment requires the use of the

Assignment The assignment requires the use of the Library/Internet research to locate and study written articles on any topics on financial accounting that was covered in the class. The student is required to critique, a ...

Burger king investigation of the following1decreasing

Burger King investigation of the following: 1.Decreasing Revenue 2.Change in Revenue Mix 3.Significant Change in "food paper & product costs" line item 4.Other significant change in expense Tim Horton's 1-Accounts Receiv ...

1 discuss how marketing is often misunderstood by the other

1. Discuss how marketing is often misunderstood by the other functional areas of business. 2. What is the meaning of Balanced and Unbalanced Assignment Problems? 3. Describe the function of a Change Control Board 4. Disc ...

Assignmentyou have just been hired as a new management

Assignment You have just been hired as a new management trainee by XYZ Co, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little i ...

Assignmentscenarioyou are a first year staff person working

Assignment Scenario You are a first year staff person working with a multidiscipline team to report on a potential company your firm is considering to invest in. The president of your company will review your team's writ ...

Appendix a in the textbook details criteria for designing

Appendix A in the textbook details criteria for Designing or Evaluating a Long-Term Care System. Research a long-term care facility in your area and prepare a PowerPoint slide presentation detailing how this specific fac ...

Assignmentbullcomplete two problems problem 1 focuses on

Assignment • Complete two problems. Problem 1 focuses on working capital and quick ratio, and Problem 2 is a comprehensive problem in which you will bring together various financial analysis measures and interpret their ...

Exxon versus chevronaccording to the textbook the income

Exxon versus Chevron According to the textbook, the income statement measures the success of a company's operations for a given period. The income statement is important to investors and creditors, because it determines ...

Assignment intermediate accounting for finance working

Assignment: Intermediate Accounting for Finance Working Capital Case Study Your job is to make ABC cash flow in years 2 and 3 (positive ending cash balances); which means you must balance ABC's cash conversion cycle days ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen