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Act 5713 Assignment 1

Satisfactory Essays

Class: ACT 5713
Name: Thu Vo Anh Ngo
ASSIGNMENT 2
After reading the “PV model under certainty”, complete the second- year B/S and I/S of the firm on the article.
ANSWER
From the information displayed in the article, we know that:
The asset will generate end-of-year cash flows of $100/year for the first two years. With the interest rate 10%/year, the present value of the firm’s future cash flow is $173.55, which is known as the capital asset and shareholder’s equity.

In year 1, the firm generates $100 cash flow, the asset’s amortization expense is $82.64, the net income is $17.36, and the remaining value of the asset is $90.91.

Because the asset will not generate end-of-year cash flows after year 2, the present value of the remaining cash

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