percent compounded monthly 2800/(1+ 0.049/12)12x3 =2800/1.157993 = 2417.98 5.2 percent compounded quarterly 2800/(1 + 0.052/4)4x3 =2800/1.167652 = 2397.97 5.4 percent compounded annually 2800/(1.054)3 = 2391.31 Present value with multiple cash flows: Saul Cervantes has just purchased some equipment for his landscaping business. He plans to pay the following amounts at the end of the next five years: $9,944, $8,670, $12,320, $8,790, and $13,552. If he uses a discount rate of 5.216 percent
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is 10% and the tax rate is zero. |Year |0 |1 |2 |3 | |Machine A’s Cash Flows |-500 |-150 |-150 |-150 | |Machine B’s Cash Flows |-650 |-100 |-100 |-100 | |Machine A’s EAC |-438.10
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benefits that the company will incur after this project implementation are as follows: * Inventory reduction (one-time, non-taxable): when you reduce inventory; it is similar to sell off some of inventory for cash, and brings the firm cash inflow. (but it is a one-time event; cash flow will turn to zero when inventory reduces to its target level) * Additional sales units due to product availability- which is ,persistent and taxable * Increased margin. (persistent and taxable) *
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of the supplies and pays for these purchases. He also receives the checks and completes the monthly bank reconciliation. The accountant is so busy that the company handles petty cash a bit differently. All employees have access to the petty cash in a desk drawer and are asked to only place a note if they use any of the cash. The accountant has recently started using pre-numbered invoices and wants to buy an indelible ink machine to print their checks. The president is waiting to hear from you if
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of the supplies and pays for these purchases. He also receives the checks and completes the monthly bank reconciliation. The accountant is so busy that the company handles petty cash a bit differently. All employees have access to the petty cash in a desk drawer and are asked to only place a note if they use any of the cash. The accountant has recently started using pre-numbered invoices and wants to buy an indelible ink machine to print their checks. The president is waiting to hear from you if
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Question 7-1 Why is the income approach to value often difficult to use on a single family residential appraisal? Typically, the income approach is difficult to use because the sale of single family, rental properties are rare in the area. Question 7-2 What are the differences between the cost and sales comparison approaches to appraising property? When using the market approach, the appraiser estimates the value of a property by comparing the selling prices of properties
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Q2: Relevant Cash Flows. The new product line sales are: 23,000 * $19,000 = $437,000,000 Boost in sales of the existing motor homes, since the new product line will be introduced: 2,600 * $73,000 = $189,800,000 – relevant. Reduced sales of its luxury motor coach sales due to the new product line, thus: 850 * $115,000 = $97,750,000 – relevant. The annual sales figure to use in evaluating this project: Net sales = $437,000,000 + $189,800,000 – $97,750,000 Net sales = $529,050,000 Q9: Calculating
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another o Be able to explain why this is necessary o Continuous compounding is NOT covered • Aligning cash flows (Big, ugly nasty problems like Jordan Ch 6, Q 57 “Bilbo” or Jaffe Ch 4, Q 52) o For example, a generic set-up might look like: ▪ FV(A) + FVA(B) = PVA (C) + PV(D) when the equals sign “occurs” at the time when the cash flows change direction (i.e. at the time of retirement, or the start of college). o Examples 4.22 – 4.25 (pages 242-244)
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checks and completes the monthly bank reconciliation. The accountant also interviews and approves of all the new hires. The accountant is so busy that the company handles petty cash a bit differently. All employees have access to the petty cash in a desk drawer and are asked to only place a note if they use any of the cash. The accountant has recently started using pre-numbered invoices and wants to buy an indelible ink machine to print their checks. The president is waiting to hear from you if
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differences means that his cashflow forecast may not be an accurate overview of cash inflow in his area. As well as this, the predictions are made for a city-centre salon, which will have a higher level of sales than a town-centre one. + Tom had vast experience in that area of business + He was able to make changes to his business depending on the forecast to prevent any difficulties. + The forecast gave an indication of cash - Toms business aims are different to Josuas - Figures provided by Joshuas
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