Question 1:

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.