Judith Company estimates two scenarios of possible future accounts receivable uncollectibles and the probability of each...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
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
Expert Answer:
Related Book For
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Posted Date:
Students also viewed these accounting questions
-
Cheese Works owns four dairies in your province and has planned upgrades for all locations. The owners are considering four projects, each of which is independent of the other three projects. The...
-
Build- It- Big Company estimates two scenarios of possible future notes receivable un-collectibles and the probability of each not being collected in the next year. The risk- free rate is 5%. For...
-
When completed submit your assignment to the appropriate area. Company A, an American company, owns Company B, a Canadian subsidiary. Company A borrowed 1,000,000 Canadian dollars as a hedge on its...
-
Assume that a company purchases merchandise for resale on December 20, 2012. The merchandise is still on hand on December 31, the company's year-end. On January 12, 2013, the merchandise is sold to a...
-
The Foo Fighters will practice or they will not sound good. Use the fact that p q is equivalent to ~ p q to write an equivalent form of the given statement.
-
Cat Auto Tech. Corp. purchased 10,000 gift certificates from DeJesus. Cat Auto Tech. Corp., an Amoco gasoline station operator, contracted with DeJesus to make 10,000 gift certificates of various...
-
Klumb Inc. uses a periodic inventory system. Its records show the following for the month of May, in which 74 units were sold. InstructionsCalculate the ending inventory at May 31 using the (a) FIFO,...
-
On the 1 January 2023, Garak's Goods Ltd sold some plant to Kleen Ltd for $82,000. Garak's Goods Ltd had originally paid $120,000 for this asset, and by the time of sale had charged accumulated...
-
Consider Coral Bay Hospital. If the initial building and equipment cost changes to $25,000,000, the MIRR will 1. Increase 2. decrease Consider Coral Bay Hospital. If the land salvage value is changed...
-
Panera offers 11 soups & macs, 4 salads, 14 sandwiches, 5 flat-bread pizzas, and 5 warm bowls. A You Pick Two is where you select any two of the following: Cup of Soup or Mac, Half Salad, Half...
-
Using an example identify three strategies that organisations may use to improve work-life balance among their employees? Which are likely to prove most effective and why? In this question you need...
-
Develop and justify a Professional Development Plan that will facilitate an increased level of digital skill attainment suitable for effective management and leadership in the contemporary workplace.
-
Marie Cole wants to be a manager. She enjoyed every course taught at school, and managed to score high grades. Each of these provided her with some clear-cut answers. Now the professor in her...
-
What is HIPPA? Why is it relevant to the practice of professional counseling? What does it require?
-
Explain about the application software available for Unix operating system?
-
Health insurance providers are clamping down on how much theyll pay for emergency services, and the hospital is considering replacing some physicians with physician assistants (PAs). Registration...
-
Apply Jacobis method to the given system. Take the zero vector as the initial approximation and work with four-significant-digit accuracy until two successive iterates agree within 0.001 in each...
-
The Happenings Company adopted the dollar- value LIFO inventory method on 12/ 31/ 2015 when the price index was 1.00. Ending inventory on the date that it adopted dollar- value LIFO is presented...
-
On January 1, 2016, Stark Incorporated issued $ 1,500,000 par value, 5%, seven- year bonds ( i. e., there were 1,500 $ 1,000 par value bonds in the issue). Interest is payable semiannually each...
-
Sarat Boot Company manufactures two types of boots rain boots and snow boots. Information related to both products is presented in the following table. Determine the ending inventory value per unit...
-
What is a business strategy? Do you agree with the definition proposed? Illustrate your answer with examples.
-
Consider one of the following firms. Read the description of a business strategy in the text. Go to the firm's website and use it to gain an understanding of the business strategy. Look at elements...
-
Which quote at the front of the chapter do you find the most insightful? Why? Under what circumstances would its implications not hold?
Study smarter with the SolutionInn App