To motivate her staff, Maria runs a few different PV scenarios to show how their additional effort could really pay off. Under average conditions, after-tax annual net operating cash flows are $79,000. Under a bit more optimistic (but still possible) conditions, after-tax annual net operating cash flows could be $109,000. She tells her staff that if these higher cash flow amounts could be earned for 4 consecutive years, a portion of that value could be used for employee perks (i.e., celebratory trips paid for by the company). She thinks she has their attention. Using two different possible discount rates (5% and 12%), calculate the range of NPVs for the average and optimistic options. (Round present value factor calculations to 5 decimal places, eg. 1.25124 and final answers to 2 decimal places e.g. 5,125.36. Enter negative amounts using either a negative sign preceding the number eg. -45 or parentheses e.g. (45).) Click here to view the factor table NPV at 5% NPV at 12% $ Average Cash Flows Optimistic Cash Flows Is the difference in these NPV amounts significant enough to suggest some nice perks?

To motivate her staff, Maria runs a few different PV scenarios to show how their additional effort could really pay off. Under average conditions, after-tax annual net operating cash flows are $79,000. Under a bit more optimistic (but still possible) conditions, after-tax annual net operating cash flows could be $109,000. She tells her staff that if these higher cash flow amounts could be earned for 4 consecutive years, a portion of that value could be used for employee perks (i.e., celebratory trips paid for by the company). She thinks she has their attention. Using two different possible discount rates (5% and 12%), calculate the range of NPVs for the average and optimistic options. (Round present value factor calculations to 5 decimal places, eg. 1.25124 and final answers to 2 decimal places e.g. 5,125.36. Enter negative amounts using either a negative sign preceding the number eg. -45 or parentheses e.g. (45).) Click here to view the factor table NPV at 5% NPV at 12% $ Average Cash Flows Optimistic Cash Flows Is the difference in these NPV amounts significant enough to suggest some nice perks?

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Description: 3 To motivate her staff, Maria runs a few different PV scenarios to show how their additional effort could really pay off. Under averageconditions, after-tax annual net operating cash flows are $79,000. Under a bit more optimistic (but still possible

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 2CE

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