Accounting

1.

Smith Manufacturing is considering the following investment proposal: Proposal A Investment $700,000 Useful life 6 years Estimated annual net cash inflows received at the end of each year $90,000 Residual value $0 Depreciation method Straight - line Annual discount rate 8% Compute the present value of the future cash inflows from Proposal Y. Present value of an ordinary annuity of $1: 3% 3% 10% 0.926 0.917 0.909 1.783 1.759 1.736 U A W N- 2.577 2.531 2.487 3.312 3.240 3.170 3.993 3.890 3.791 4.623 4.486 4.355 Present value of $1: 8% 9% 10% 0.926 0.917 0.909 0.857 0.842 0.826 0.794 0.772 0.751 O U A W N - 0.735 0.708 0.683 0.681 0.650 0.621 0.630 0.596 0.564\fFelice Lucas has just won the state lottery and has the following three payout options for after tax prize money: 1. $156,000 per year at the end of each of the next six years 2. $300,000 (lump sum) now 3. $510,000 (lump sum) six years from now The annual discount rate is 9%. Compute the present value of the rst option. (Round your answer to the nearest whole dollar.) 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 3.890 3.791 6 4.623 4.486 4.355 7 5.206 5.033 4.868 Present value of $1: 8% 9% 10% 1 0.926 0.917 0.909 2 0.857 0.842 0.826 3 0.794 0.772 0.751 4 0.735 0.708 0.683 5 0.681 0.650 0.621 6 0.630 0.596 0.564 7 0.583 0.547 0.513 \fFelice Lucas has just won the state lottery and has the following three payout options for after - tax prize money: 1. $154,000 per year at the end of each of the next six years 2. $312,000 (lump sum) now 3. $500,000 (lump sum) six years from now The annual discount rate is 9%. Compute the present value of the rst option. (Round your answer to the nearest whole dollar.) 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 3.890 3.791 6 4.623 4.486 4.355 7 5.206 5.033 4.868 Present value of $1: 8% 9% 10% 1 0.926 0.917 0.909 2 0.857 0.842 0.826 3 0.794 0.772 0.751 4 0.735 0.708 0.683 5 0.681 0.650 0.621 6 0.630 0.596 0.564 7 0.583 0.547 0.513 \fEdward Hughes has just won the state lottery and has the following three payout options for after tax prize money: 1. $166,000 per year at the end of each of the next six years 2. $306,000 (lump sum) now 3. $512,000 (lump sum) six years from now The annual discount rate is 9%. Compute the present value of the second option. (Round to nearest whole dollar.) Present value of $1: 8% 9% 10% 1 0.926 0.917 0.909 2 0.857 0.842 0.826 3 0.794 0.772 0.751 4 0.735 0.708 0.683 5 0.681 0.650 0.621 6 0.630 0.596 0.564 7 0.583 0.547 0.513 O A. $678,000 0 B. $306,000 0 C. $102,400 0 D. $409,600 Edward Hughes has just won the state lottery and has the following three payout options for after -tax prize money: 1. $168,000 per year at the end of each of the next six years 2. $318,000 (lump sum) now 3. $506,000 (lump sum) six years from now The annual discount rate is 9%. Compute the present value of the second option. (Round to nearest whole dollar.) Present value of $1: 8% 9% 10% 1 0.926 0.917 0.909 2 0.857 0.842 0.826 3 0.794 0.772 0.751 4 0.735 0.708 0.683 5 0.681 0.650 0.621 6 0.630 0.596 0.564 7 0.583 0.547 0.513 O A. $674,000 O B. $404,800 0 C. $101,200 O D. $318,000 Gloria Ammon has just won the state lottery and has the following three payout options for after - tax prize money: 1. $54,000 per year at the end of each of the next six years 2. $310,000 (lump sum) now 3. $520,000 (lump sum) six years from now The annual discount rate is 9%. Compute the present value of the third option. (Round to nearest whole dollar.) Present value of $1: 8% 9% 10% 1 0.926 0.917 0.909 2 0.857 0.842 0.826 3 0.794 0.772 0.751 4 0.735 0.708 0.683 5 0.681 0.650 0.621 6 0.630 0.596 0.564 7 0.583 0.547 0.513 o A. $82,800 0 B. $256,000 0 0. $309,920 0 D. $85,824