Managerial Accounting Homework Revew Chapter 9 Answer Key

Managerial Accounting Homework Revew Chapter 9 Answer Key -...

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Chapter 9 EXERCISES E5. The numbers decrease from left to right in a given row because cash received in the future is worth less the higher your required rate of return. The numbers decrease from top to bottom in a given column because cash received further in the future is less valuable today. E6. Cash Present Value Flow Factor Total \$800 3.7908 \$ 3,032.64 800 .6209 496 .72 \$3,529 .36 E7. Plan A Total \$100,000 Plan B Cash Present Value Flow Factor Total \$ 10,000 6.7101 \$ 67,101 100,000 .4632 46,320 \$113,421 Plan C Cash Present Value Flow Factor Total \$20,000 6.7101 \$134,202 Plan C should be selected as it has the highest present value. E8. Cash Present Value Flow Factor Total (\$50,000) 1.0000 (\$50,000.00)

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22,000 3.4331 75,528 .20 \$ 25,528 .20 The net present value is positive so the project should be undertaken. E9. The investment should not be undertaken because the internal rate of return of 12% is less than the required rate of 18%. Initial outlay \$79,100 Annuity amount 14,000 Outlay ÷ annuity amount = PV of annuity factor 5.6500 Internal rate of return 12% E11. Annual depreciation \$50,000 ÷ 5 years \$10,000.00 Annual tax savings \$10,000 × .40 \$4,000.00 Present value of \$4,000 per year for 5 years at 12% \$4,000 × 3.6048 \$14,419.20 9- 2
E12.

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