Answer:
$83254.25
Explanation:
The formulae is nothing but the value factored to today
=(100)+(1000/(1+4%)^1)+(100000/(1+4%)^5)
=$83254.25
Answer:
1. NPV calculation
Option 1 ( with Greewood fertilizer) : $2.256
Option 2 ( with Peter's Fertilizer) : $3.835
2. Rate of return calculation:
Option 1: 45.12%
Option 2: 95.875%
Option 2 should be chosen as it provides higher NPV.
Explanation:
1. The detailed calculation for each option is:
Option 1: Present value of sales proceed - initial cost = (8/1.05^2) - 5 = $2.256
Option 2: Present value of sales proceed - initial cost = (10/1.05^5) - 4 = $3.835.
2. The detailed calculation for each option is:
Option 1: NPV/Initial cost = 2.256/5= 45.12%
Option 2: NPV/Initial cost =3.835/10 = 95.875%
To assess which option should be picked with the assumption of infinite time horizon, NPV should be key driver. As Option 2 has higher NPV, Option 2 is chosen.
Answer:
Ayayai Corporation
Statement of Cash Flows
For the Year Ended December 31, 202x
Cash flows from operating activities:
Net income $50,700
Adjustments to reconcile net income:
- Depreciation expense $17,900
- Increase in accounts payable $13,600
- Increase in accounts receivable ($12,000)
- Increase in AFS securities ($17,100)
- <u>Increase in inventory ($7,200) ($4,800)</u>
Net cash flow provided by operating activities $45,900
Notes payable are part of the financing activities of the company, they are not part of the operating activities. So any change in the value of notes payable must be included in the cash flows from financing activities.
