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Salsk061 [2.6K]
3 years ago
9

Southern california publishing company is trying to decide whether or not to revise its popular textbook, financial psychoanalys

is made simple. the company has estimated that the revision will cost $90,000. cash flows from increased sales will be $21,600 the first year. these cash flows will increase by 4 percent per year. the book will go out of print five years from now. assume that the initial cost is paid now and revenues are received at the end of each year.

Business
1 answer:
steposvetlana [31]3 years ago
8 0

If the company requires a return of 10 percent for such an investment, calculate the present value of the project.

The present value of the project is $72349.51.

Since we consider only incremental cash flows for a project, we consider $21,600 for year one and calculate a 4% increase for each of the additional years.

We then calculate the Present Value Interest Factor (PVIF) at 10% for four years using the formula :

PVIF = 1 / [(1+r)^n]

Next, we find the product of the respective cash flows and PVIF for each year.

Finally, we find the total of the discounted cash flows for the four years to find the Present Value of the project.

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Delicious77 [7]

Answer:

$17,146

Explanation:

Given:

Acquisition cost of patent = $2,000,000. $1,000,000 is paid immediately. Remaining $1,000,000 is paid after 2 years on September 30, 2020.

We have to calculate present value of $1,000,000 @8%, 2 years. Present value factor is 0.8573.

Present value of $1,000,000 = 1,000,000×0.8573 = $857,300.

Calculation of interest expense:

Principal amount = $857,300

Rate = 0.08

Time period = \frac{3}{12}= \frac{1}{4}\

Interest expense = 857,300\times 0.08\times \frac{1}{4}

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Therefore, interest expense to be recorded as on December 31, 2018 is $17,146

5 0
3 years ago
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I’m pretty sure the answer is d
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Anuta_ua [19.1K]

Answer:

energy, direction, and persistence

Explanation:

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There needs to be an energy to push for success, there is a direction or specific goal to be attained, and persistence to keep pushing for attainment of the goal.

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OleMash [197]

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The statement that "BMW and United Airlines cannot be considered in the same industry analysis because they compete in different industries" is wrong.

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