The following information relates to three independent investment decisions, each with a 10-year life and no salvage
Question:
The following information relates to three independent investment decisions, each with a 10-year life and no salvage value:
Using the present value tables in Exhibits 26–3 and 26–4, solve for the missing information pertaining to each investment proposal.
In Exhibits 26–3
In Exhibits 26–4
Salvage ValueSalvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
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Investment cost Incremental annual cash inflows Incremental annual cash outflows Discount rate yielding a net present value of zero $ $141,250 $80,520 14,000 37,000 19,000 6,000 7,000 10% 12% Present Value of $1 Due in n Periods* Number of Periods Discount Rate 1% 1 % 5% 990 .985 980 971 971 956 961942 951.928 942 915 933 901 923 888 914 875 905 862 820742 788 700 699 6% 8% 10% 12% 15% 20% 952 943926 99 893 870 833 907 890 87 82797756 694 864840 794 751 712 658 579 823 792 735 683 636 572 482 784 74768 621 567 497 402 746 705 630 564 507 432 35 711 665 583 513 452376 279 677 627 540 47404327 233 645 592 500 424284 194 614 558 463 386 322 47162 377 312 215 49 104061 026 310 2478 102 066 035 013 173 123 063 032 017 007 001 2 3 4 6 7 10 20 24 36 585
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The missing information for each investment is solved for as follows Investment A The present value ...View the full answer
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Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
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