Swimmers Co. operates a set of water parks with leisure facilities for families in Aqualandia. During January 20X1, Swimmers acquired a boat for organizing boat trips across the river Aquatica. Boat trip business went very well since then, however, competitor Royal Cruises decided to spread its business to the same location.

At the end of 20X3, Swimmers Co. estimated that revenues from boat trips will go down by 12% as a result of new competitor. Managers adjusted projection of cash flows from boat during its remaining useful life of 7 years based on most recent budgets, all available supporting information and economic conditions surrounding boat business. These projections are justifiable for 5 years. Cash flows for years beyond 20X8 represent management's best estimate (refer to table below).

Managers believe that at the end of boat's useful life, boat will be sold for 20 000 EUR (not included in cash flow projections below).

According to management, appropriate pre-tax discount rate reflecting risks associated with boat but excluding inflation is 5% p.a. Cash flow projections are inflated by assumed inflation rate of 2% p.a.

Calculate boat's value in use.

\begin{tabular}{|r|r|} \hline Year & \multicolumn{1}{|c|}{ Cash flow } \\ \hline 204 & 72,000 \\ \hline 205 & 69,000 \\ \hline 206 & 64,000 \\ \hline 207 & 59,000 \\ \hline 208 & 52,000 \\ \hline 209 & 45,000 \\ \hline 2010 & 38,000 \\ \hline & 399,000 \\ \hline \end{tabular} \begin{tabular}{|r|r|} \hline Year & \multicolumn{1}{|c|}{ Cash flow } \\ \hline 204 & 72,000 \\ \hline 205 & 69,000 \\ \hline 206 & 64,000 \\ \hline 207 & 59,000 \\ \hline 208 & 52,000 \\ \hline 209 & 45,000 \\ \hline 2010 & 38,000 \\ \hline & 399,000 \\ \hline \end{tabular}