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Posted on Aug 24, 2024

Allegience Insurance Companys management is considering an advertising program that would require an initial expenditure of $193,635 and bring in additional sales over the next

image text in transcribed Allegience Insurance Companys management is considering an advertising program that would require an initial expenditure of $193,635 and bring in additional sales over the next five years. The projected additional sales revenue in year 1 is $92,000, with associated expenses of $33,500. The additional sales revenue and expenses from the advertising program are projected to increase by 10 percent each year. Allegiences tax rate is 40 percent. (Hint: The $193,635 advertising cost is an expense.) Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.)

Table IV Present Value of Series of $1.00 Cash Flows 161 -_1 Period 30% 0.769 1.361 3 5 5 8 9 4% 6% 0.962 0.943 1.886 1.833 2.775 2.673 3.630 3.465 4.452 4.212 5.2424.917 6.002 5.582 6.733 6.210 7 .435 6.802 8.111 7.360 8.760 7.887 9 .3858.384 9.986 8.853 10.563 9.295 11.118 9.712 13.590 11.470 17.292 13.765 19.793 15.046 8% 10% 0.926 0.909 1.783 1.736 2.577 2.487 3.312 3.170 3.993 3.791 4.623 4.355 .206 4.868 5.747 5.335 6.247 5.759 6.710 6.145 7.139 6.495 7.536 6.814 7.904 7.103 8.244 7.367 8.5597.606 9.818 8.514 11.258 9.427 11.925 9.779 12% 14% 16% 18% 0.893 0.877 0.862 0.847 1.690 1.647 1.605 1.566 2.402 2.322 2.246 2.174 3.037 2.914 2.798 2.690 3.606 3.433 3.274 3.127 4.111 3.8893.685 3.498 4.564 4.288 4.039 3.812 4.968 4.639 4.344 4.078 5.328 4.946 4.607 4.303 5.6505.216 4.833 4.494 5.938 5.453 5.029 4.656 6.194 5.660 5.197 4.793 6.424 5.842 5.342 4.910 6.628 6.002 5.468 5.008 6.811 6.142 5.575 5.092 7.469 6.623 5.9295.353 8.056 7.003 6.177 5.517 8.244 7.105 6.234 5.548 20% 22% 0.833 0.820 1.528 1.492 2.106 2.042 2.589 2.494 2.991 2.864 3.326 3.167 3.605 3.416 3.837 3.619 4.031 3.786 4.1923.923 4.327 4.035 4.4394.127 4.533 4.203 4.611 4.265 4.675 4.315 4.870 4.460 4.979 4.534 4.997 4.544 24% 0.806 1.457 1.981 2.404 2.745 3.020 3.242 3.421 3.566 3.682 3.776 3.851 3.912 3.962 4.001 4.110 4.160 4.166 25% 26% 0.800 0.794 1.440 1.424 1.962 1.923 2.362 2.320 2.689 2.635 2.951 2.885 3.161 3.083 3.329 3.241 3.463 3.366 3.571 3.465 3.656 3.544 3.725 3.606 3.780 3.656 3.824 3.696 3.8593.726 3.954 3.808 3.995 3.842 3.999 3.846 28% 0.781 1.392 1.868 2.241 2.532 2.759 2.937 3.076 3.184 3.269 3.335 3.387 3.427 3.459 3.483 3.546 3.569 3.571 10 1.816 2.166 2.436 2.643 2.802 2.925 3.019 3.092 3.147 3.190 3.223 3.249 3.268 3.316 3.332 3.333 12 30 40 Table IV Present Value of Series of $1.00 Cash Flows 161 -_1 Period 30% 0.769 1.361 3 5 5 8 9 4% 6% 0.962 0.943 1.886 1.833 2.775 2.673 3.630 3.465 4.452 4.212 5.2424.917 6.002 5.582 6.733 6.210 7 .435 6.802 8.111 7.360 8.760 7.887 9 .3858.384 9.986 8.853 10.563 9.295 11.118 9.712 13.590 11.470 17.292 13.765 19.793 15.046 8% 10% 0.926 0.909 1.783 1.736 2.577 2.487 3.312 3.170 3.993 3.791 4.623 4.355 .206 4.868 5.747 5.335 6.247 5.759 6.710 6.145 7.139 6.495 7.536 6.814 7.904 7.103 8.244 7.367 8.5597.606 9.818 8.514 11.258 9.427 11.925 9.779 12% 14% 16% 18% 0.893 0.877 0.862 0.847 1.690 1.647 1.605 1.566 2.402 2.322 2.246 2.174 3.037 2.914 2.798 2.690 3.606 3.433 3.274 3.127 4.111 3.8893.685 3.498 4.564 4.288 4.039 3.812 4.968 4.639 4.344 4.078 5.328 4.946 4.607 4.303 5.6505.216 4.833 4.494 5.938 5.453 5.029 4.656 6.194 5.660 5.197 4.793 6.424 5.842 5.342 4.910 6.628 6.002 5.468 5.008 6.811 6.142 5.575 5.092 7.469 6.623 5.9295.353 8.056 7.003 6.177 5.517 8.244 7.105 6.234 5.548 20% 22% 0.833 0.820 1.528 1.492 2.106 2.042 2.589 2.494 2.991 2.864 3.326 3.167 3.605 3.416 3.837 3.619 4.031 3.786 4.1923.923 4.327 4.035 4.4394.127 4.533 4.203 4.611 4.265 4.675 4.315 4.870 4.460 4.979 4.534 4.997 4.544 24% 0.806 1.457 1.981 2.404 2.745 3.020 3.242 3.421 3.566 3.682 3.776 3.851 3.912 3.962 4.001 4.110 4.160 4.166 25% 26% 0.800 0.794 1.440 1.424 1.962 1.923 2.362 2.320 2.689 2.635 2.951 2.885 3.161 3.083 3.329 3.241 3.463 3.366 3.571 3.465 3.656 3.544 3.725 3.606 3.780 3.656 3.824 3.696 3.8593.726 3.954 3.808 3.995 3.842 3.999 3.846 28% 0.781 1.392 1.868 2.241 2.532 2.759 2.937 3.076 3.184 3.269 3.335 3.387 3.427 3.459 3.483 3.546 3.569 3.571 10 1.816 2.166 2.436 2.643 2.802 2.925 3.019 3.092 3.147 3.190 3.223 3.249 3.268 3.316 3.332 3.333 12 30 40