The Swimmers Co.'s Boat's value in use (net present value) is Eur 321,221.
Data and Calculations:
Pre-tax discount rate = 5% p.a., excluding inflation
Inflation rate = 2% p.a.
Inflated discount rate = 7% (5% + 2%)
Salvage value = Eur 20,000
<u>Projected cash inflows:</u>
Year           Cash Inflows    Discount Factor     Discounted Cash flows
20X4         Eur 72,000              0.935                     $67,320
20X5        Eur 69,000               0.873                      60,237
20X6        Eur 64,000               0.816                      52,224
20X7        Eur 59,000               0.763                      45,017
20X8       Eur 52,000               0.666                      34,632
20X9       Eur 45,000               0.623                      28,035
20X10     Eur 38,000               0.582                        22,116
20X10     Eur 20,000              0.582                         11,640
Total discounted cash flows                         Eur 321,221
Thus, the Swimmers Co. will calculate the boat's value in use as Eur 321,221, taking into account all the discounted cash inflows.
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