Miller runs are not-for-profit charity organization that is not subject to income tax. He is considering the
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- Miller runs are not-for-profit charity organization that is not subject to income tax.
He is considering the capital investment proposal but has 1) $88,000, 2) an acceptable rate of return of 8%, 3) annual net cash flows of $19,000 for 6 years, 4) no salvage value, and 5) a present value factor of X (the result of $1.00 received annually at the end of each year for six years at 8% interest compounded annually). Is the NPV method of this proposal positive or negative? Please explain how you arrive at your answer. 3 marks
- You invest $10,000 into an education portfolio. During the first year the investment earned 20% for the year. During the second year, you earned only 4% for that year. How much is your original deposit worth at the end of the two years? 2 marks
- What is the future value at time period 4 (t = 4) of the set of expected future cash flows as seen below? Assume a discount rate of 10%. Please show your working. 2 marks
Time | 0 | 1 | 2 | 3 | 4 |
Cash flow | $3000 | $2000 | $8000 | $5000 | ? |
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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