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Requirement 2 . Could you characterize this stream of cash flows as an annuity? Why or why not? The stream of cash flows an annuity
Requirement Could you characterize this stream of cash flows as an annuity? Why or why not?
The stream of cash flows an annuity because it is a stream of cash payments made at time intervals.
Requirement Use the Present Value of Ordinary Annuity of $ table to determine the present value of the same stream of cash flows. Compare your results to your answer to Requirement Round to
three decimal places,
XXXX
Click the icon to view Present Value of Ordinary Annuity of $ table.
The present value of an annuity of $ received each year for five years, at per year is
The sum of the present values in Requirement
he present value calculated with the Present Value of Ordinary Annuity of $ table.
Requirement Explain your findings.
This exercise shows how Annuity PV factors
of the PV factors found in the Present Value of $ tables. Reference
tablePresent Value of $Periodscompany now wants to analyze the proposal using the discounted cash flow methods. The water treatment system costs $ has a eightyear life, and has no residual value. The estimated net cash
inflows from environmental cleanup savings are $ per year over its life. The company's required rate of return is
Click the icon to view Present Value of $ table.Click the icon to view Present Value of Ordinary Annuity of $ table.
Read the requirements.
Requirement Compute the water treatment system's NPVEnter any factor amounts to three decimal places,
XXXX Use parentheses or a minus sign for a negative NPV
Requirement Find the water treatment system's IRR exact percentage is not required
The IRR internal rate of return is between
Requirement Should Vigor pro buy the water treatment system? Why or why not?
Vigor pro
buy the water treatment system. It has a
NPV and its IRR
the company's required rate of return.SnowDream operates a Rocky Mountain ski resort. The company is planning its lift ticket pricing for the coming ski season. Investors would like to earn a return on investment on the company's
$ of assets. The company primarily incurs fixed costs to groom the runs and operate the lifts. SnowDream projects fixed costs to be $ for the ski season. The resort serves about
skiers and snowboarders each season. Variable costs are about $ per guest. Currently, the resort has such a favorable reputation among skiers and snowboarders that it has some control over
the lift ticket prices.
Read the requirements.
Requirement Would SnowDream emphasize target pricing or costplus pricing? Why?
SnowDream should emphasize a
approach to pricing because it has been able to differentiate its ski resort from others in the area. Because of its good reputation, managers will have
control over pricing. Of course, they still need to consider whether the
price is within the range customers are willing to pay.
Requirement If other resorts in the area charge $ per day, what price should SnowDream charge?
Complete the following table to calculate the price SnowDream should charge per lift ticket.
Plus:
Plus:
Divided by:
Price per lift ticket
Given SnowDream's favorable reputation, theyfrom now. Continue this process for a total of five years. Round to three decimal places.
Click the icon to view Present Value of $ table.
Read the requirements.
Requirement What is the total present value of the cash flows received over the fiveyear period?
Calculate the total present value of $ received each year. Round to three decimal places,
XXXX
Present Value
One year from now
Two years from now
Three years from now
Four years from now
Five years from now
Total present value
Requirement Could you characterize this stream of cash flows as an annuity? Why or why not?
The stream of cash flows an annuity because it is a stream of cash payments made at time intervals.
Requirement Use the Present Value of Ordinary Annuity of $ table to determine the present value of the same stream of cash flows. Compare your results to your answer to Requirement Round to
three decimal places,
XXXX
Click the icon to view Present Value of Ordinary Annuity of $ table.
The present value of an annuity of $ received each year for five years, at per year is
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