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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

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A partnership intentionally created and recognized, orally or in writing is known as a express partnership. 
hope this helps! 
8 0
2 years ago
A course that costs $500 will allow you to get a job that pays $2 more per hour than your current job. How many hours will you n
torisob [31]

Answer:

250 hours.

Explanation:

Cost of course : $500

The extra income from the course is $2 per hour

to pay off the cost of the course requires earning $500 by working at a rate $2 per hour.

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=250 hours.

7 0
2 years ago
Waterways Corporation is a private corporation formed for the purpose of providing the products and the services needed to irrig
zmey [24]

Answer:

Explanation:

PREPARE COST OF GOODS MANUFACTURED :

Beginning work in process 42000

Raw material consumed

Beginning raw material 38000

Add : raw material purchase 184500

Less : Ending raw material (52700)

Raw material consumed 169800

DIrect labour 42000

Factory overhead

Factory supplies used 16800

Factory utilities 10200

Depreciation factory equipment 16800

Indirect labour 48000

Property taxes 5500

Reent factory equipment 47000

Repairs factory equipment 4500

Total manufacturing overhead 148800

Total manufacturing cost 360600

Less : Ending work in process (52700)

Cost of goods manufactured

INCOME STATEMENT :

Sales revenue 1350000

Cost of goods sold

Beginning finished goods inventory 72550

Cost of goods manufactured 349900

goods available for sale 422450

Less : endin finished goods inventory (68800)

Cost of goods olsld (353650)

Gross profit 996350

Less : advertising expenses (54000)

Less : selling commission (40500)

Less : dep on office equipment (2400)

Less : office suppplies used (1600)

Less : other administrative exp (72000)

Less : Salaries exp (325000) (495500)

Net income 500850

BALANCE SHEET CURRENT SECTION :

ASSETS

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Account receivable 275000

Prepaid exp 41250

Inventory

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Total current assets 750450

8 0
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Aleonysh [2.5K]

Answer:

Trade creation

Explanation:

Trade creation is the process where there is increase in economics welfare as a result of joining a free trade area for example a customs Union.

Consumption experiences a shift from high cost producers to low cost producers causing expansion in trade.

In the given instance due to formation of free trade agreement, high cost plastic production is now replaced with low cost import of plastics from the other company.

There is a shift from high cost producers to low cost producers as a result of trade agreement between the two nations.

3 0
2 years ago
Sonoma county passed a law making it legal to drive 65 mph on freeways inside the county. A state law limited all vehicles in th
Julli [10]

Answer:

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5 0
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