Question
Present-value calculations, rather than future-value calculations, are the key to analysis in the field of corporate finance. Why is this the case? Explain the importance
Present-value calculations, rather than future-value calculations, are the key to analysis in the field of corporate finance. Why is this the case? Explain the importance of understanding today's value of projected future revenues and/or costs.
The proposed sale of a plant is part of the effort to divest a company of underperforming assets. A total of $1.2 billion in assets, with a book value of $650 million, have been identified for potential sale. Assuming that all these sales could be accomplished in 2021, identify the major impacts on the following:
a. Balance Sheet, especially these accounts:
- Property, plant, and equipment
- Accumulated depreciation
- Net property, plant, and equipment
b. Statement of Cash Flows, especially the Long-Term Investing Activities
c. Income Statement
Explain the potential impacts, both positive and negative, of these changes for the company.
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