Ironwood Charities is considering an investment in one of their buildings that is expected to return the following cash flows: Use Exhibit A.8. Year 1 4Nm & in 2 3 4 5 Net Cash Flow $ 15,000 27,000 43,000 58,000 48,000 This schedule includes all cash inflows from the project, which will also require an immediate $152,000 cash outlay. The organization is tax-exempt; therefore, taxes need not be considered. Required: a. What is the net present value of the project if the appropriate discount rate is 8 percent? b. What is the net present value of the project if the appropriate discount rate is 4 percent? Complete this question by entering your answers in the tabs below. Required A Required B What is the net present value of the project if the appropriate discount rate is 8 percent? Note: Round PV factor to 3 decimal places. Negative amount should be indicated by a minus sign. Net present value < Required A Required B >

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Present Value of $1
Year 1/2%
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
4%
1% 2%
0.995 0.990 0.980 0.962
0.985 0.971 0.942
5% 6% 8% 10% 12% 14% 15% 16% 18% 20% 22% 24% 25% 30% 35% 40%
0.952 0.943 0.926 0.909 0.893 0.877 0.870 0.862 0.847 0.833 0.820 0.806 0.800 0.769 0.741 0.714
0.990 0.980 0.961 0.925 0.907 0.890 0.857 0.826 0.797 0.769 0.756 0.743 0.718 0.694 0.672 0.650 0.640 0.592 0.549 0.510
0.889 0.864 0.840 0.794 0.751 0.712 0.675 0.658 0.641 0.609 0.579 0.551 0.524 0.512 0.455 0.406 0.364
0.980 0.961 0.924 0.855 0.823 0.792 0.735 0.683 0.636 0.592 0.572 0.552 0.516 0.482 0.451 0.423 0.410 0.350 0.301 0.260
0.975 0.951 0.906 0.822 0.784 0.747 0.681 0.621 0.567 0.519 0.497 0.476 0.437 0.402 0.370 0.341 0.328 0.269 0.223 0.186
0.971 0.942 0.888 0.790 0.746 0.705 0.630 0.564 0.507 0.456 0.432 0.410 0.370 0.335 0.303 0.275 0.262 0.207 0.165 0.133
0.966 0.933 0.871 0.760 0.711 0.665 0.583 0.513 0.452 0.400 0.376 0.354 0.314 0.279 0.249 0.222 0.210 0.159 0.122 0.095
0.961 0.923 0.853 0.731 0.677 0.627 0.540 0.467 0.404 0.351 0.327 0.305 0.266 0.233 0.204 0.179 0.168 0.123 0.091 0.068
0.914 0.837 0.703 0.645 0.592 0.500 0.424 0.361 0.308 0.284 0.263 0.225 0.194 0.167 0.144 0.134 0.094 0.067 0.048
0.951 0.905 0.820 0.676 0.614 0.558 0.463 0.386 0.322 0.270 0.247 0.227 0.191 0.162 0.137 0.116 0.107 0.073 0.050 0.035
0.947 0.896 0.804 0.650 0.585 0.527 0.429 0.350 0.287 0.237 0.215 0.195 0.162 0.135 0.112 0.094 0.086 0.056 0.037 0.025
0.942 0.887 0.788 0.625 0.557 0.497 0.397 0.319 0.257 0.208 0.187 0.168 0.137 0.112 0.092 0.076 0.069 0.043 0.027 0.018
0.937 0.879 0.773 0.601 0.530 0.469 0.368 0.290 0.229 0.182 0.163 0.145 0.116 0.093 0.075 0.061 0.055 0.033 0.020 0.013
0.933 0.870 0.758 0.577 0.505 0.442 0.340 0.263 0.205 0.160 0.141 0.125 0.099 0.078 0.062 0.049 0.044 0.025 0.015 0.009
0.928 0.861 0.743 0.555 0.481 0.417 0.315 0.239 0.183 0.140 0.123 0.108 0.084 0.065 0.051 0.040 0.035 0.020 0.011 0.006
0.956
Transcribed Image Text:Present Value of $1 Year 1/2% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 4% 1% 2% 0.995 0.990 0.980 0.962 0.985 0.971 0.942 5% 6% 8% 10% 12% 14% 15% 16% 18% 20% 22% 24% 25% 30% 35% 40% 0.952 0.943 0.926 0.909 0.893 0.877 0.870 0.862 0.847 0.833 0.820 0.806 0.800 0.769 0.741 0.714 0.990 0.980 0.961 0.925 0.907 0.890 0.857 0.826 0.797 0.769 0.756 0.743 0.718 0.694 0.672 0.650 0.640 0.592 0.549 0.510 0.889 0.864 0.840 0.794 0.751 0.712 0.675 0.658 0.641 0.609 0.579 0.551 0.524 0.512 0.455 0.406 0.364 0.980 0.961 0.924 0.855 0.823 0.792 0.735 0.683 0.636 0.592 0.572 0.552 0.516 0.482 0.451 0.423 0.410 0.350 0.301 0.260 0.975 0.951 0.906 0.822 0.784 0.747 0.681 0.621 0.567 0.519 0.497 0.476 0.437 0.402 0.370 0.341 0.328 0.269 0.223 0.186 0.971 0.942 0.888 0.790 0.746 0.705 0.630 0.564 0.507 0.456 0.432 0.410 0.370 0.335 0.303 0.275 0.262 0.207 0.165 0.133 0.966 0.933 0.871 0.760 0.711 0.665 0.583 0.513 0.452 0.400 0.376 0.354 0.314 0.279 0.249 0.222 0.210 0.159 0.122 0.095 0.961 0.923 0.853 0.731 0.677 0.627 0.540 0.467 0.404 0.351 0.327 0.305 0.266 0.233 0.204 0.179 0.168 0.123 0.091 0.068 0.914 0.837 0.703 0.645 0.592 0.500 0.424 0.361 0.308 0.284 0.263 0.225 0.194 0.167 0.144 0.134 0.094 0.067 0.048 0.951 0.905 0.820 0.676 0.614 0.558 0.463 0.386 0.322 0.270 0.247 0.227 0.191 0.162 0.137 0.116 0.107 0.073 0.050 0.035 0.947 0.896 0.804 0.650 0.585 0.527 0.429 0.350 0.287 0.237 0.215 0.195 0.162 0.135 0.112 0.094 0.086 0.056 0.037 0.025 0.942 0.887 0.788 0.625 0.557 0.497 0.397 0.319 0.257 0.208 0.187 0.168 0.137 0.112 0.092 0.076 0.069 0.043 0.027 0.018 0.937 0.879 0.773 0.601 0.530 0.469 0.368 0.290 0.229 0.182 0.163 0.145 0.116 0.093 0.075 0.061 0.055 0.033 0.020 0.013 0.933 0.870 0.758 0.577 0.505 0.442 0.340 0.263 0.205 0.160 0.141 0.125 0.099 0.078 0.062 0.049 0.044 0.025 0.015 0.009 0.928 0.861 0.743 0.555 0.481 0.417 0.315 0.239 0.183 0.140 0.123 0.108 0.084 0.065 0.051 0.040 0.035 0.020 0.011 0.006 0.956
Ironwood Charities is considering an investment in one of their buildings that is expected to return the following cash flows: Use
Exhibit A.8.
Year
1
4Nm & in
2
3
4
5
Net Cash Flow
$ 15,000
27,000
43,000
58,000
48,000
This schedule includes all cash inflows from the project, which will also require an immediate $152,000 cash outlay. The organization is
tax-exempt; therefore, taxes need not be considered.
Required:
a. What is the net present value of the project if the appropriate discount rate is 8 percent?
b. What is the net present value of the project if the appropriate discount rate is 4 percent?
Complete this question by entering your answers in the tabs below.
Required A
Required B
What is the net present value of the project if the appropriate discount rate is 8 percent?
Note: Round PV factor to 3 decimal places. Negative amount should be indicated by a minus sign.
Net present value
< Required A
Required B >
Transcribed Image Text:Ironwood Charities is considering an investment in one of their buildings that is expected to return the following cash flows: Use Exhibit A.8. Year 1 4Nm & in 2 3 4 5 Net Cash Flow $ 15,000 27,000 43,000 58,000 48,000 This schedule includes all cash inflows from the project, which will also require an immediate $152,000 cash outlay. The organization is tax-exempt; therefore, taxes need not be considered. Required: a. What is the net present value of the project if the appropriate discount rate is 8 percent? b. What is the net present value of the project if the appropriate discount rate is 4 percent? Complete this question by entering your answers in the tabs below. Required A Required B What is the net present value of the project if the appropriate discount rate is 8 percent? Note: Round PV factor to 3 decimal places. Negative amount should be indicated by a minus sign. Net present value < Required A Required B >
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