Company A sells machineryto Company B.

Company B agrees to pay Company A $300,000 at the end of each of the next 5 years, with discount rate 6%.

Instruction:

[1] provide a clear calculation to determine the first year of Present value of cash flow

[2] provide a clear calculation for each year cash payment reduction for 5 years.

[3] please provide an explanation towards your calculation.

Question 2 :

Replacement value and Net realizable value:

Information:

Products

A

B

C

D

E

F

Cost

$ 8.00

$ 6.50

$ 8.50

$ 9.00

$ 5.50

$ 7.75

Replacement Cost

5.00

7.50

6.50

10.50

3.00

7.00

ExpectedSelling Price

12.00

5.00

7.00

10.00

6.00

8.00

Cost to Complete or sale

4.50

3.50

5.00

7.00

2.50

3.00

Normal Profit (25%)

Instructions:

[1] You will apply 25% to calculate the normal profit.(please do not use the one on the table. )

[2] You will create three tables to determine the Net Realizable Value = Ceiling ;

Net Realization Value = Floor;

Value will be used as the market amount

[3] Please explain each value will be used as the market amount

[4] Please provide a clear calculation and brief explanation.