FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question

For each requirement, change the values of the given information as shown and keep all other original data the same. Then enter your updated final answers for each scenario.

Scenario A:

   
Future value to be received $ 10,000  
Future date received   3 years
 

 

Discount Rate
6%
10%
16%
 

 

Scenario B:

   
Annual Cash Receipt $ 5,000  
Number of Years   6 years
 

 

Discount Rate
6%
10%
16%
 

 

Scenario C:

Discount Rate           8%

Investment Project Cash Flow
Initial Investment $ (6,500)  
Year 1 $ 700  
Year 2 $ 800  
Year 3 $ 1,400  
Year 4 $ 3,600  
Year 5 $ 6,800  
 

 

Required:

a. A company is expecting to receive a lump sum of money at a future date from now. Using the PV formula in Excel, what is the Present Value of that money at three different rates? (Round your answers to 2 decimal places.)

 

**Required:**

a. A company is expecting to receive a lump sum of money at a future date from now. Using the PV (Present Value) formula in Excel, what is the Present Value of that money at three different rates? *(Round your answers to 2 decimal places.)*

| Discount Rate | Present Value |
|---------------|---------------|
| 6%            |               |
| 10%           |               |
| 16%           |               |

b. A company is expecting to receive a stream of year-end annual cash payments over multiple years. Using the PV formula in Excel, what is the Present Value of that money at three different discount rates? *(Round your answers to 2 decimal places.)*

| Discount Rate | Present Value |
|---------------|---------------|
| 6%            |               |
| 10%           |               |
| 16%           |               |
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Transcribed Image Text:**Required:** a. A company is expecting to receive a lump sum of money at a future date from now. Using the PV (Present Value) formula in Excel, what is the Present Value of that money at three different rates? *(Round your answers to 2 decimal places.)* | Discount Rate | Present Value | |---------------|---------------| | 6% | | | 10% | | | 16% | | b. A company is expecting to receive a stream of year-end annual cash payments over multiple years. Using the PV formula in Excel, what is the Present Value of that money at three different discount rates? *(Round your answers to 2 decimal places.)* | Discount Rate | Present Value | |---------------|---------------| | 6% | | | 10% | | | 16% | |
### Investment Project Analysis

A company is planning to invest in a project over a 5-year period but wants to know its financial implications. It expects the cash inflow return on the investment to steadily increase over the 5 years. Using the information given, determine the Total Net Cash Flows, the Net Present Value, and the estimated Payback Period.

**Instructions:**
- Estimate the payback period to the nearest year.
- Round your Net Cash Flow values to the nearest whole dollar and your final Net Present Value answer to 2 decimal places.

#### Investment Project Table

| Investment Project      | Total Net Cash Flow |
|-------------------------|---------------------|
| Initial Investment      |                     |
| Year 1                  |                     |
| Year 2                  |                     |
| Year 3                  |                     |
| Year 4                  |                     |
| Year 5                  |                     |
| NPV of Investment       |                     |
| Estimated Payback Period|                     |

This table is used to calculate and document the financial outlook of the projected investment over the 5-year period.
expand button
Transcribed Image Text:### Investment Project Analysis A company is planning to invest in a project over a 5-year period but wants to know its financial implications. It expects the cash inflow return on the investment to steadily increase over the 5 years. Using the information given, determine the Total Net Cash Flows, the Net Present Value, and the estimated Payback Period. **Instructions:** - Estimate the payback period to the nearest year. - Round your Net Cash Flow values to the nearest whole dollar and your final Net Present Value answer to 2 decimal places. #### Investment Project Table | Investment Project | Total Net Cash Flow | |-------------------------|---------------------| | Initial Investment | | | Year 1 | | | Year 2 | | | Year 3 | | | Year 4 | | | Year 5 | | | NPV of Investment | | | Estimated Payback Period| | This table is used to calculate and document the financial outlook of the projected investment over the 5-year period.
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