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3 years ago

Net Present Value Method

Business

1 answer:

arsen [322]3 years ago

4 0

Answer:

year net cash flow

0 -$150,000

1 $80,000

2 $65,000

3 $50,000

4 $40,000

A) NPV = -$150,000 + ($80,000 x .87) + ($65,000 x .756) + ($50,000 x .658) + ($40,000 x .572) = -$150,000 + $69,600 + $49,140 + $32,900 + $22,880 = -$150,000 + $174,520 = $24,520

B) Yes , because the net present value indicates that the return on the proposal is greater than the minimum desired rate of return of 15%. Since the NPV is positive ($24,520), it means that the cash inflows are higher than the cash outflows when we use a 15% discount rate.

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Paulson Company began the year with retained earnings of $500,000. During the year, the company issued $720,000 of common stock,

Murljashka [212]

Answer:

Revenue for the period = $2,100,000

Explanation:

Provided information,

Opening balance of retained earnings = $500,000

Expenses recorded for the period = $2,000,000

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Therefore increase in retained earnings = $520,000 - $500,000 = $20,000

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Now, putting values in above,

Earnings - $2,000,000 - $80,000 = $20,000

Earnings = $20,000 + $80,000 + $2,000,000 = $2,100,000

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Answer:

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