Problem 1. Annual cash inflows that will arise from an investment are given below. ...
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Accounting
Problem 1.
Annual cash inflows that will arise from an investment are given below.
Year 1 5,000
Year 2 4,000
Year 3 8,000
Year 4 6,000
Total $23,000
Compute the present value of the cash inflows assuming a 12% discount rate.
Problem 2.
Lennox Company plans to construct a new factory 10 years from now. It is estimated the factory will cost $1,000,000 to build. What lump sum amount should the company invest now to have $1,000,000 available at the end of the 10-year period? Assume that the company can invest money at 12%.
Problem 3.
Congratulations! Youve won the lottery. Your winnings? You will receive $20,000 annually for 10 years! Assuming you can earn 10% on your investments, what is the present value of your winnings?
Problem 4.
You borrow $10,000 from the bank today and promise equal annual repayments for 10 years. Assuming a 6% interest rate, how much is each annual repayment?
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