Chapter12_Dec_01

# Chapter12_Dec_01 - Managerial Accounting Chapter 12 Capital...

This preview shows pages 1–10. Sign up to view the full content.

Managerial Accounting Chapter 12 Capital budgeting

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Time value of money: \$100 invested at 5% interest \$127.63 discounted at 5% are worth \$100 today
Table 12B-1: discounted PV of single cash flow \$1 received in the future (p.598)

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Applying time value concept: Value of a present value of stream of \$15,000 cash received during period of 5 years discounted at 12%
Table 12B-2 : discounted PV of series of equal cash flows of \$1 (p.599)

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Applying time value concept: Value of a present value of series of \$15,000 cash received during period of 5 years discounted at 12% Referring to Table 12B-2 \$15,000 X 3.605 = \$54,075
Practice In 3 years, when he is discharged from the armed services, Steve wants to buy an \$8,000 power bot. What lump-sum amount must Steve invest now to have the \$8,000 at the end of 3 years if he can invest money at: 1.10% 2.14%

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Practice : Annual cash inflows that will arise from 2 competing investment projects: The discount rate is 18%. Compute the PV of the cash inflows for each investment
Practice: Frank Ormsby of Caldwell is the state’s newest millionaire.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern