Home Insert Page Layout Formulas Data Review в Expected Annual Percentage Increase 2017 Square Cloudburst $567,000 $3,510,000 $364,800 $3,060,000 $202,200 $ 450,000 Square 6% Cloudburst 3 Sales Revenues 4 Cost of Sales 5 Net cash flow 5.5% 5% 4.5% 2.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ortel Telecom sells telecommunication products and services to a variety
of small businesses. Two of Ortel’s key clients are Square and Cloudburst, both fast-growing technology start-ups located in New York City. Ortel has compiled information regarding its transactions with Square and Cloudburst for 2017, as well as its expectations regarding their interactions over the next
3 years: 

Ortel’s transactions with Square and Cloudburst are in cash. Assume that they occur at year-end. Ortel is
headquartered in the Cayman Islands and pays no income taxes. The owners of Ortel insist on a required
rate of return of 12%.
Q. Based on the net present value from cash flows over the next 3 years, is Cloudburst or Square a more
valuable customer for Ortel?

Home
Insert
Page Layout
Formulas
Data
Review
в
Expected Annual
Percentage Increase
2017
Square Cloudburst
$567,000 $3,510,000
$364,800 $3,060,000
$202,200 $ 450,000
Square
6%
Cloudburst
3 Sales Revenues
4 Cost of Sales
5 Net cash flow
5.5%
5%
4.5%
2.
Transcribed Image Text:Home Insert Page Layout Formulas Data Review в Expected Annual Percentage Increase 2017 Square Cloudburst $567,000 $3,510,000 $364,800 $3,060,000 $202,200 $ 450,000 Square 6% Cloudburst 3 Sales Revenues 4 Cost of Sales 5 Net cash flow 5.5% 5% 4.5% 2.
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