Help with Managerial Accounting? Hello, can someone help me solve this problem a

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Help with Managerial Accounting?

Hello, can someone help me solve this problem and possibly explain? I'm studying for an upcoming exam. Thanks in advance!

P12-54A Solve various time value of money scenarios (Learning Objectives 3 & 4) 1. Ethan just hit the jackpot in Las Vegas and won $35,000! If he invests it now at a 10% interest rate, how much will it be worth in 15 years? much does he need to invest now at a 12% interest rate to fund his retirement goal? invests this savings at 10%, how much money will she be able to withdraw at the end 2. Trent would like to have $3,500,000 saved by the time he retires in 30 years. How 3. Assume that Maria accumulates savings of $2 million by the time she retires. If she 4. Ashley plans to invest $3,000 at the end of each year for the next eight years. Assuming 5. Assuming a 12% interest rate, how much would Vivienne have to invest now to be 6. Nick is considering a capital investment that costs $485,000 and will provide the of each year for 20 years? a 14% interest rate, what will her investment be worth eight years from now? able to withdraw $15,000 at the end of each year for the next ten years? following net cash inflows: Net Cash Inflow $300,000 $206,000 $100,000 Year 2. Using a hurdle rate of 8%, find the NPV of the investment. 7. What is the IRR of the capital investment described in Question 6?

Explanation / Answer

Pay back period of A =Initial investment/Annual cash flow=8,440,000/1,600,000=5.275years

Pay back period of B =Initial investment/Annual cash flow=8,240,000/1,250,000=6.592years

ARR of A:

Annual Depreciation = (Initial Investment Scrap Value) ÷ Useful Life in Years
Annual Depreciation = ($8,440,000 $0) ÷ 9 $937,778
Average Accounting Income = $1,600,000 $937,778 = $662222

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