Judith Company estimates two scenarios of possible future accounts receivable uncollectibles and the probability of each...
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Judith Company estimates two scenarios of possible future accounts receivable uncollectibles and the probability of each not being collected in the next year. The risk-free rate is 6%. (Click the icon to view the scenarios.) (Click the icon to view the Future Value of $1 table.) (Click the icon to view the Future Value of an Ordinary Annuity table.) (Click the icon to view the Future Value of an Annuity Due table.) Requirement (Click the icon to view the Present Value of $1 table.) (Click the icon to view the Present Value of an Ordinary Annuity table.) (Click the icon to view the Present Value of an Annuity Due table.) For each of the scenarios, compute the expected cash flow value based on the probabilities given. Compare the expected cash flows on each case. Begin by computing the estimated cash flow loss for each scenario. (Enter all amounts as positive amounts.) Estimated Loss Scenario 1: Probability of Loss Occurring Expected Cash Flow Loss 50,000 25% 12,500 51,000 30% 15,300 57,000 30% 17,100 62,000 15% 9,300 54,200 Total expected cash flow loss for Scenario 1 Scenario 2: Estimated Loss Probability of Loss Occurring Expected Cash Flow Loss $ 50,000 15% 7,500 51,000 30 % 15,300 57,000 30% 17,100 62,000 25% 15,500 55,400 Total expected cash flow loss for Scenario 2 Now compute the present value of the expected cash flows for each scenario. (Use the present value and future value tables, the formula method, a financial calculator, or a spreadsheet for your calculations. If using future and present value tables or the formula method, use factor amounts rounded to five decimal places, X.XXXXX. Round all calculations and your final answer to the nearest cent, $X.XX.) Scenario 1 Scenario 2 Present Value Judith Company estimates two scenarios of possible future accounts receivable uncollectibles and the probability of each not being collected in the next year. The risk-free rate is 6%. (Click the icon to view the scenarios.) (Click the icon to view the Future Value of $1 table.) (Click the icon to view the Future Value of an Ordinary Annuity table.) (Click the icon to view the Future Value of an Annuity Due table.) Requirement (Click the icon to view the Present Value of $1 table.) (Click the icon to view the Present Value of an Ordinary Annuity table.) (Click the icon to view the Present Value of an Annuity Due table.) For each of the scenarios, compute the expected cash flow value based on the probabilities given. Compare the expected cash flows on each case. Begin by computing the estimated cash flow loss for each scenario. (Enter all amounts as positive amounts.) Estimated Loss Scenario 1: Probability of Loss Occurring Expected Cash Flow Loss 50,000 25% 12,500 51,000 30% 15,300 57,000 30% 17,100 62,000 15% 9,300 54,200 Total expected cash flow loss for Scenario 1 Scenario 2: Estimated Loss Probability of Loss Occurring Expected Cash Flow Loss $ 50,000 15% 7,500 51,000 30 % 15,300 57,000 30% 17,100 62,000 25% 15,500 55,400 Total expected cash flow loss for Scenario 2 Now compute the present value of the expected cash flows for each scenario. (Use the present value and future value tables, the formula method, a financial calculator, or a spreadsheet for your calculations. If using future and present value tables or the formula method, use factor amounts rounded to five decimal places, X.XXXXX. Round all calculations and your final answer to the nearest cent, $X.XX.) Scenario 1 Scenario 2 Present Value
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Related Book For
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Posted Date:
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