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puteri [66]
3 years ago
13

A series of cash flows may not always necessarily be an annuity. Cash flows can also be uneven and variable in amount, but the c

oncept of the time value of money will continue to apply. Consider the following case: The Purple Lion Beverage Company expects the following cash flows from its manufacturing plant in Palau over the next five years: Annual Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5 $250,000 $37,500 $180,000 $300,000 $550,000 The CFO of the company believes that an appropriate annual interest rate on this investment is 6.5%. What is the present value of this uneven cash flow stream, rounded to the nearest whole dollar
Business
1 answer:
devlian [24]3 years ago
6 0

Answer:

$1,051,448

Explanation:

Present value is the sum of discounted cash flows.

present value can be calculated using a financial calculator

Cash flow in year 1 =  $250,000

Cash flow in year 2 = $37,500

Cash flow in year 3 =  $180,000

Cash flow in year 4 =  $300,000

Cash flow in year 5 =  $550,000

I = 6.5%

Present value = $1,051,448

To find the PV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.  

3. Press compute  

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You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 6 percent, -14 percent, 12perce
Alexeev081 [22]

Answer:

1.6%

Explanation:

For computing the average nominal risk premium, first we have to determine the average nominal return which is shown below:

= (Stock over past five years) ÷ (number of years)

= (6% - 14% + 12% + 9% + 11%) ÷ (5 years)

= 4.8%

Now the average nominal risk premium would be

= Average nominal return - average T-bill rate

= 4.8% - 3.2%

= 1.6%

3 0
3 years ago
) Which protections exist under the Servicemembers Civil Relief Act? Check all that apply.
nexus9112 [7]

Answer:

1. Protection against default, evictions, foreclosures, and repossessions

2. Terminate residential and automobile leases due to PCS

Written and oral disclosure of terms

3. Reduce interest to 6% on certain loans and lines of credit obtained prior to entering active duty​

Explanation:

The Servicemembers Civil Relief Act (SCRA) provides financial and legal protections for active-duty service members, as well as National Guard and reserve members, and their families. This protections are:

  1. creditors reduction of interest rate on debts to 6% for liabilities obtained prior to entering active duty​
  2. Protection against default, evictions, foreclosures, and repossessions, preservice mortgage debt is valid if made during or within nine months after your service on active duty, unless carrying out a valid court order
  3. Deferment of income tax before or during military service.
  4. Protection against eviction
  5. Protection against default judgments
  6. Postponement of court proceedings if on duty
  7. Termination of automobile, residential lease and phone service  by delivering a written notice of termination.
  8. Voting rights
  9. Life insurance coverage
5 0
3 years ago
If the credit balance of the Allowance for Doubtful Accounts account exceeds the amount of a bad debt being written off, the ent
Firlakuza [10]

Answer:

d.No effect on the expenses of the current period.

Explanation:

In the case when the credit balance of the allowance for doubtful debt more than the bad debt amount i.e. written off

So the entry for writing off against the allowance would result in no effect on the expense for the present period

As the bad debt expense is debited and the allowance for doubtful debt would be credited therefore the option d is correct

4 0
3 years ago
[5] According to the FASB’s conceptual framework, which of the following best describes the distinction between expenses and los
PIT_PIT [208]

Answer:

D. Losses result from peripheral or incidental transactions, and expenses result from ongoing major or central operations of the entity

Explanation:

The expenses represent the cash outlow or liabilities taken to carry out the activities to continue his operations.

While the Gains and Losses are incidental transactions or other events which are not controlled by the entity management. They aren't the outcome of the company's decisions. Thus, they could arise from changes in price of real state, equipment, tecnology breakthrough which means equipment obsolete and so on.

7 0
3 years ago
The advent of containerization has:
Firdavs [7]

Answer:

The correct answer is letter "E": significantly lowered the costs of shipping goods over long distances.

Explanation:

Containerization is the method of transporting goods in containers. These technique has become standard in freight transport having regulated the dimensions and maximum capacity of materials being moved. One of the big advantages containerization has provided is to transport different materials from different entities all together which implies sharing the costs of the same container, something that lowers the price of the transportation regardless if it is domestic or international.

7 0
3 years ago
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