Homework Chapter 8

Homework Chapter 8 - Michael Ientile Financial Management...

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Michael Ientile Financial Management Chapter 8 Homework P8-2 Basic Terminology Operating Cash Inflows Year Machine 1 Machine 2 Machine 3 Machine 4 1 $50,000 $70,000 $65,000 $90,000 2 $70,000 $70,000 $65,000 $80,000 3 $90,000 $70,000 $80,000 $70,000 4 ($30,000) $70,000 $80,000 $60,000 5 $100,000 $70,000 ($20,000) $50,000 Independent / Mutually exclusive Unlimited / Capital rationing Accept - Reject / Ranking decisions Conventional / Non-conventional Situation A Mutually exclusive Capital Rationing Accept - Reject Conventional Situation B Mutually exclusive Capital Rationing Ranking Non-conventional Situation C Independent Unlimited Accept - Reject P8-3 Relevant Cash Flow Pattern Fundamentals A. Year 0 Year 1 Year 2 Year 17 Year 18 ($120,000) $25,000 $25,000 $25,000 $25,000 ($5,000) ($5,000) ($5,000) ($5,000) Initial Investment ($120,000) Operating Cash Inflows $20,000 B. Year 0
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Homework Chapter 8 - Michael Ientile Financial Management...

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