Question
When solving the NPV for the BUY decision, there are two different sets of cash flows. The first set of cash flows states CF0=-$1M, CF1-10=-$406,345,
My Questions are:
1. Why does CF0 not change from the first CF to the PV CFs, while the other CF values do change?
2. How does the CF1-10 value and the CF10 value relate? Shouldn't the CF10 value take into account ADS+expenses?
3. Since the CF10 value is the equity reversion, why doesn't it also include the ADS+expenses? If so, How?
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Introduction to Management Accounting
Authors: Charles Horngren, Gary Sundem, Jeff Schatzberg, Dave Burgsta
16th edition
978-0133058819, 9780133059748, 133058816, 133058786, 013305974X , 978-0133058789
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