1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
tangare [24]
3 years ago
11

Southern California Publishing Company is trying to decide whether to revise its popular textbook, Financial Psychoanalysis Made

Simple. The company has estimated that the revision will cost $65,000. Cash flows from increased sales will be $20,000 the first year. These cash flows will increase by 3 percent per year. The book will go out of print four years from now. Assume that the initial cost is paid now and revenues are received at the end of each year. If the company requires a return of 8 percent for such an investment, calculate the present value of the cash inflows of the project.
Business
1 answer:
In-s [12.5K]3 years ago
8 0

Answer:

Present value of the cash inflow= $69,086.97

Explanation:

<em>An annuity is a series of annual cash outflows or inflows which payable or receivable for a certain number of periods. If the annual cash flow is expected to increase by a certain percentage yearly, it is called a growing annuity. </em>

To work out the the present value of a growing annuity,  we use the formula:

PV = A/(r-g) × (1- (1+g/1+r)^n)

A- annual cash flow - 20,000

r- rate of return - 8%

g- growth rate - 3%

n- number of years- 4

I will break out the formula into two parts to make the workings very clear to follow. So applying this formula, we can work out the present value of the growing annuity (winnings) as follows.  

A/(r-g)  = 20,000/(0.08-0.03) = $400,000

(1- (1+g/1+r)^n) = 1 -(1.03/1.08)^4 =0.17271

PV = A/(r-g) × (1- (1+g/1+r)^n)  =400,000 × 0.17271 =69,086.97

Present value of the cash inflow = $69,086.97

You might be interested in
Betty owns 100 shares of MegaCorp, Inc., which she bought in MegaCorp’s initial public offering of 10,000 shares. MegaCorp makes
yaroslaw [1]

Answer:

Preemptive rights

Explanation:

Preemptive rights are a way of preventing the dilution of a shareholder's ownership in a corporation.  Preemptive rights are set by a contract clause that establishes that in case the corporation issues new stock, then a current shareholder must be given the right to buy additional shares before the stocks are sold to other investors.

The preemptive right usually gives the stockholder the right to buy new stock in the same proportion as his/her current stock ownership. For example, if an investor currently owns 2% of the company's stock, he/she will be able to buy 2% of every new set of stocks issued.

4 0
4 years ago
You can have your cake or chose to eat it
Oksi-84 [34.3K]

Answer:

Exclude people from your property

4 0
3 years ago
Read 2 more answers
Despite new technologies like personal MP3 players and music online, traditional radio continues to see billions of dollars in a
saveliy_v [14]

Answer: rigid customer base

Explanation: The reason behind the ongoing success of radio industry is that over 90% of individuals in the world, especially in western countries, still listens to audio in their free time once or twice in a given week, thus making it an attractive platform for different business entities to advertise their products.

Thus, because of that rigid customer base, the radio industry is still making millions.

3 0
3 years ago
The statement of stockholders' equity includes these amounts:______
Mariana [72]

These sums are included in the period's ending balance, retained profits, dividends, and net income in the statement of stockholders' equity.

Stockholder equity, often known as shareholders' equity or owners' equity, is the amount of assets left over for shareholders to use after all liabilities have been settled. It is determined by subtracting a company's total assets from its total liabilities, or alternatively by adding its share capital and retained earnings and deducting its treasury shares. Among the possible components of shareholders' equity are common stock, paid-in capital, retained earnings, and treasury stock.

Stockholders' equity can conceptually be used to assess the amount of money a company has kept on hand. If this number is negative, a business may be on the verge of bankruptcy, especially if there is also a substantial debt obligation.

There are two main sources of Stockholder equity, which is also known as the company's book value. The money that was initially and subsequently invested in the business through share offerings is the first source. The company's retained profits (RE), which are accumulated over time as a result of its operations, make up the second source. Retained earnings typically make up the greatest portion, especially when dealing with businesses that have been around for a while.

Learn more about Stockholder equity here

brainly.com/question/13278063

#SPJ4

5 0
1 year ago
What two things should Zara keep in mind to make sure that the food her restaurant serves is free of chemical contaminants?
aivan3 [116]
Don’t keep food near cleaning liquids

Don’t spray sanitizer near any food items

(May be wrong, don’t hate)
6 0
3 years ago
Other questions:
  • Travel is generally divided into which two broad categories?
    7·1 answer
  • Swifty Company reports the following operating results for the month of August: sales $315,000 (units 5,000); variable costs $21
    9·1 answer
  • Xie Company identified the following activities, costs, and activity drivers for 2017. The company manufactures two types of go-
    10·1 answer
  • Marv Company's direct labor costs for manufacturing its only product were as follows for October: Standard direct labor hours (D
    5·1 answer
  • You are the decision maker for purchasing office equipment in your organization. One sales representative privately offers you s
    10·1 answer
  • Why do lenders often require a down payment when credit is used to purchase a good?
    14·1 answer
  • Is the creation of real or perceived differences in goods or services.
    12·1 answer
  • Fact Pattern 28-2 Adam, a director of Beta Computer Company, learns that a Beta engineer has developed a new, significantly fast
    13·1 answer
  • A in the expected future exchange rate ______ the demand for u.s. dollars. in the u.s. demand for imports _______ the demand for
    10·1 answer
  • vasily is a manager at a large snack foods company. vasily believes his company would benefit from being larger and thinks the s
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!