chivej Apri 2 C OdeO import Trom AnolteConned thent, and drag to the Favorites B
ID: 2511310 • Letter: C
Question
chivej Apri 2 C OdeO import Trom AnolteConned thent, and drag to the Favorites Bar folder. Or import from another browser,Import favornites omework tomework Help Save&Exit; Check mys Bret Colins is reviewing his company's nwestment in a cement plant The company pard S16,000000 five years ago to acquire the plant. Now top management is considering an opportunty to sell it. The president wants to know whether expectations before he decides its tate. The actual cash nows folow (P of St and FVA of $ (Use appropriste fectorfe) from the tables provided) the plant has met orignal company's discount rate for present value computations is 10 percent. Expected and Year 1Year 2Year 3Year 4 Year S Expected $3,330,800 $5,eee,ee0 $4,600,800 $5,178,880 $4,238,000 Actual 2,638,800 2,970,000 4, 988,800 3,810,600 3,560,890 Required n.&b.; Compute the nel present value of the expected and actual cash flows as of the bepinning of the investment (Negstive should be indicated by a minus sign Round your intermediate celculations and final answer to the nearest whole doliar) Net prevent vae Prew34 NextExplanation / Answer
The investment should be considered in Year 0 and the inflows start from Year 6.
6 7 8 9 10
Expected 3330000 5000000 4600000 5170000 4230000
Actual 2630000 2970000 4900000 3810000 3560000
Discount rate 0.56 0.51 0.47 0.42 0.39
Multiply the cash inflows with the discount rates and we get:
Expected NPV: - 5585144
Actual NPV: - 7717122
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.