A factory costs $430,000. You forecast that it will produce cash inflows of $135,000 in year 1, $195,000 in year 2, and $330,000 in year 3. The discount rate is 12%. a. Calculate the PV of cash inflows. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

A factory costs $430,000. You forecast that it will produce cash inflows of $135,000 in year 1, $195,000 in year 2, and $330,000 in year 3. The discount rate is 12%. a. Calculate the PV of cash inflows. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 16EB: Project Y cost $8,000 and will generate net cash inflows of $1,500 in year one, $2,000 in year two,...

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

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im confused as to how to strart.

A factory costs $430,000. You forecast that it will produce cash inflows of $135,000 in year 1, $195,000 in year 2, and $330,000 in year 3. The discount rate is 12%.

a.	Calculate the PV of cash inflows. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Definition Definition Transfer of funds into a company by any third party, which may happen due to any operational, investing, and financing activities. The cash inflow includes payments made by customers or investments made by the investors into the company by purchasing its equity.

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