А C Capital investment $ 2,000 7,000 4,200 Annual revenues 3,200 8,000 6,000 Annual costs 2,100 5,100 4,000 Market value at the end of useful life 100 600 420 Useful life (in years) 10 10 10 The correct ranking of Alternative is Blank 1 Select Alternative Blank 2

А C Capital investment $ 2,000 7,000 4,200 Annual revenues 3,200 8,000 6,000 Annual costs 2,100 5,100 4,000 Market value at the end of useful life 100 600 420 Useful life (in years) 10 10 10 The correct ranking of Alternative is Blank 1 Select Alternative Blank 2

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.21E

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

100%

What is the best alternative using incremental Analysis?
А
C
...
Capital investment
$ 2,000
7,000
4,200
Annual revenues
3,200
8,000
6,000
Annual costs
2,100
5,100
4,000
Market value at the end of useful life
100
600
420
Useful life (in years)
10
10
10
The correct ranking of Alternative is Blank 1
Select Alternative Blank 2

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