Restate the net cash flows in Table 6.6 in real terms. Discount the restated cash flows at
Question:
Restate the net cash flows in Table 6.6 in real terms. Discount the restated cash flows at a real discount rate. Assume a 20 percent nominal rate and 10 percent expected inflation. NPV should be unchanged at +3,802, or $3,802,000.
Transcribed Image Text:
Period 2 523 12,887 7,729 1,210 262 1. Sales* 2. Cost of goods sold 3. Other costs* 4. Tax 5. Cash flow from operations (1 – 2 - 3 - 4) 6. Change in working capital 7. Capital investment and disposal 8. Net cash flow (5 + 6 + 7) 9. Present value at 20% 32,610 48,901 19,552 29,345 1,331 35,834 19,717 21,492 11,830 1,611 837 2,200 4,000 -1,400 -1,580 1,464 1,772 1,939 3,432 5,929 4,053 682 8,678 1,307 4,176 -682 1,581 2,002 -2,600 -934 3,686 8,295 12,163 -1,972 -1,629 -550 -739 - 10,000 - 12,600 - 12,600 -1,237 1,949* 5,757 3,269 912 2,947 6,323 10,534 9,985 4,013 -1,484 5,080 3,659 2,047 1,928 Net present value - +3,802 (sum of 9)
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 75% (12 reviews)
See the table below We begin with the cash flows given in the text Table 66 line 8 and utiliz...View the full answer
Answered By
Gaurav Soni
Teaching was always an area where I can pursue my passion. I used to teach my friends and junior during my school and college life. After completing my professional qualification (chartered accountancy) and before joining my job, I also joined an organization for teaching and guidance to my juniors. I had also written some articles during my internship which later got published. apart from that, I have also given some presentations on certain amendments/complex issues in various forms.
Linkedin profile link:
https://www.linkedin.com/in/gaurav-soni-38067110a
5.00+
7+ Reviews
13+ Question Solved
Related Book For
Principles of Corporate Finance
ISBN: 978-0072869460
7th edition
Authors: Richard A. Brealey, Stewart C. Myers
Question Posted:
Students also viewed these Corporate Finance questions
-
Restate the net cash flows in Table in real terms. Discount the restated cash flows at a real discount rate. Assume a 20% nominal rate and 10% expected inflation. NPV should be unchanged at+3,802,...
-
The net cash flows from an investment are -X dollars in the first year, positive Y dollars in year T, and zero in all other years. Write a formula for the NPV. Set the NPV equal to zero, and solve...
-
The net cash flows from an investment project are $-15,000 in the first year, $ -11,000 in the second year, $5,000 in the third year, $1,800 in the fourth year, $7,000 in the fifth year, $6,400 in...
-
Briefly explain your answers Fig.1 1. Assuming the monopoly pictured above is a profit maximizing monopoly, what price will the monopoly charge for its output? 2. The profit maximizing monopoly will...
-
Exactly what is that "corresponds" in the correspondence principle?
-
Great Bubbles, Inc., produces multicolored bubble solution used for weddings and other events. The company's static budget income statement for March follows. It is based on expected sales volume of...
-
Water is pumped with a centrifugal pump, and measurements made on the pump indicate that for a flowrate of \(240 \mathrm{gpm}\) the required input power is \(6 \mathrm{hp}\). For a pump efficiency of...
-
Trish Craig and Ted Smith have a partnership and share income and losses in a 3:1 ratio. They decide to liquidate their partnership on December 31, 2014, when the balance sheet shows the following:...
-
Company DreamWorks Pixar Universal Expenses $ 40,000 94,000 21,000 Total Assets $ 85,000 Net Income $ 37,000 159,000 54,000 86,000 6,800 a. Compute the debt ratio for each of the three companies....
-
As CFO for Sundown Corp, you have initiated discussions to refinance the business. NoMoneyHoney Corp. has presented an offer to replace the current long-term debt structure with a new long-term...
-
Look again at projects A, B, C, and D in Section 5.4. How would the linear programming setup change if? a. Cash not invested at date 0 could be invested at an interest rate r and used at date 1. b....
-
In 1898 Simon North announced plans to construct a funeral home on land he owned and rented out as a storage area for railway carts. (A local newspaper commended Mr. North for not putting the cart...
-
Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2013 are: All sales are on account. Collections are expected to be 50% in the month of sale, 30% in the first...
-
1. List and describe the three types of manufacturing costs. 2. Describe the differences between product costs and period costs. 3. The management of a manufacturing company always has the...
-
5) Simplify or do the operation on the following formulas: 1) 4a 9 2) (2x + y) = 3) (xa)b+ (xb)a= 4) (8x). (2x-2)=
-
Discuss how costs are classified for the purpose of preparing traditional format income statement and how that cost classification differs from the one used for the contribution format income...
-
As noted in the information given, the Company's CFO was a former manager with your firm and is a very qualified and capable individual. During your planning meeting, the current engagement manager...
-
Write up an Essay on Search Engine Marketing (SEM) and Search Engine Optimization (SEO) in general. Then about SEO and SEM in the fashion apparel Industry.
-
Financial instruments are crucial to the operation of the economy. a. Financial arrangements can be either formal or informal. Industrial economies are dominated by formal arrangements. b. A...
-
Saccharin is an artificial sweetener that is used in diet beverages. In order for it to be metabolized by the body, it must pass into cells. Below are shown the two forms of saccharin. Saccharin has...
-
Without doing any calculations, determine the sign of S sys for each chemical reaction. a. 2 KClO 3 (s) 2 KCl(s) + 3 O 2 ( g) b. CH 2 = CH 2 ( g) + H 2 ( g) CH 3 CH 3 (g) c. Na(s) + 1/2 Cl 2 (g) ...
-
Vocabulary test. Explain the differences between: a. Real and financial assets. b. Capital budgeting and financing decisions. c. Closely held and public corporations. d. Limited and unlimited...
-
Which of the following statements always apply to corporations? a. Unlimited liability. b. Limited life. c. Ownership can be transferred without affecting operations. d. Managers can be fired with no...
-
Which of the following statements more accurately describe the treasurer than the controller? a. Responsible for investing the firms spare cash. b. Responsible for arranging any issue of common...
-
A force in the positive direction of an x axis acts on an object moving along that axis. If the magnitude of the force is F = 7.2e*/3.1 N, with x in meters, find the work done by as the object moves...
-
A horizontal board of negligible thickness and area 4.0 m hangs from a spring scale that reads 60 N when a 2.0 m/s wind moves below the board. The air above the board is stationary. When the wind...
-
The only force acting on a 2.2 kg body as it moves along the positive x axis has an x component Fx = -5x N, where x is in meters. The velocity of the body at x = 2.5 m is 9.0 m/s. (a) What is the...
Study smarter with the SolutionInn App