TABLE 8-1 ATCFS for Example 8-2 (4) (1) End-of-Year, (2) ATCF (3) (P/F, f%, k – b) = [1/(1.052)k-0] (R$), b = 0 ATCF k (A$) -172,400 1.0 -172,400 - 19,963 46,626 1 -21,000 51,600 0.9506 2 0.9036 3 53,000 0.8589 45,522 47,520 45,169 42,934 4 58,200 58,200 0.8165 5 0.7761 6. 58,200 0.7377 7 58,200 0.7013 40,816 38,796 8 58,200 0.6666

Corporate Financial Accounting
14th Edition
ISBN:9781305653535
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter10: Liabilities: Current, Installment Notes, And Contingencies
Section: Chapter Questions
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An engineering project team is analyzing the potential expansion of an existing production facility. Different design alternatives are being considered. The estimated after-tax cash flow (ATCF) in actual dollars for one alternative is shown in column 2 of the shown Table. If the general price inflation rate (f ) is estimated to be 5.2% per year during the eight-year analysis period, what is the real-dollar ATCF that is equivalent to the actual-dollar ATCF? The base time period is year zero (b = 0).

TABLE 8-1 ATCFS for Example 8-2
(4)
(1)
End-of-Year,
(2)
ATCF
(3)
(P/F, f%, k – b)
= [1/(1.052)k-0] (R$), b = 0
ATCF
k
(A$)
-172,400
1.0
-172,400
- 19,963
46,626
1
-21,000
51,600
0.9506
2
0.9036
3
53,000
0.8589
45,522
47,520
45,169
42,934
4
58,200
58,200
0.8165
5
0.7761
6.
58,200
0.7377
7
58,200
0.7013
40,816
38,796
8
58,200
0.6666
Transcribed Image Text:TABLE 8-1 ATCFS for Example 8-2 (4) (1) End-of-Year, (2) ATCF (3) (P/F, f%, k – b) = [1/(1.052)k-0] (R$), b = 0 ATCF k (A$) -172,400 1.0 -172,400 - 19,963 46,626 1 -21,000 51,600 0.9506 2 0.9036 3 53,000 0.8589 45,522 47,520 45,169 42,934 4 58,200 58,200 0.8165 5 0.7761 6. 58,200 0.7377 7 58,200 0.7013 40,816 38,796 8 58,200 0.6666
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