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VashaNatasha [74]
3 years ago
8

Stellan Manufacturing is considering the following two investment​ proposals: Proposal X Proposal Y Investment $ 720 comma 000 $

512 comma 000 Useful life 5 years 4 years Estimated annual net cash inflows received at the end of each year $ 150 comma 000 $ 110 comma 000 Residual value $ 58 comma 000 ​$0 Depreciation method Straight Minusline Straight Minus Line Annual discount rate ​10% ​9% Present value of an ordinary annuity of​ $1: ​8% ​9% ​10% 1 0.926 0.917 0.909 2 1.783 1.759 1.736 3 2.577 2.531 2.487 4 3.312 3.240 3.170 5 3.993 3.809 3.791 6 4.623 4.486 4.355 Compute the present value of the future cash inflows from Proposal Y.
Business
1 answer:
vichka [17]3 years ago
6 0

Answer:

Present value of future cash inflows of Project Y = $110,000 X 3.240 = $356,400

Explanation:

Provided cost of Proposal Y = $512,000

Residual Value = $0

Depreciation will not be considered as we need to consider the present value of future cash flows, depreciation does not involve any cash flow.

Useful life = 4 years

Estimated cash inflow per year = $110,000

Discount rate = 9%

Present Value of an Ordinary Annuity = 3.240 @ 9% for 4 years

Thus present value of future cash inflows = $110,000 X 3.240 = $356,400

Note: Net Present Value = Present Value of Cash Inflows - Present Value of  Cash Outflow = $356,400 - $512,000 = -$155,600

Final Answer

Present value of future cash inflows of Project Y = $110,000 X 3.240 = $356,400

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The type of overhead costing system that would be the best fit for Lunker is: Traditional costing system using design hours as the basis for allocation.

<h3>What is the Traditional Costing System?</h3>

The traditional costing system is a method applied in accounting that aims at determining the cost of production. One driver is assigned as the basis of allocation.

In the case of Lunker Lures above, the driver that is used as the basis of allocation should be design hours.

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8 0
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nikitadnepr [17]

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7 0
3 years ago
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mr Goodwill [35]

Answer:

Explanation:

Step 1:

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vovangra [49]

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The natural next step is a strategic plan to overcome rivals in a business by forming trusted and good relations with customers. Strong barriers in the form of enhanced connections with the customers are made so that competitive attacks could be withstood.

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