Using a time line The financial manager at Starbuck industries is considering an

Question

Using a time line The financial manager at Starbuck industries is considering an investment the end of year 1, $7,000 at the end of years 2 and 3, $12.000 at the end of year 4, $8,000 at the end of year 5, and $6,000 at the end of year 6 a. Select the time line option that represents the cash flows associated with Starbuck Industries proposed investment b. Which of the approaches uture value or present value do financial managers rely on most often for decision making? Why? a. Which of the following time lines correctly represents the cash fows associated with Starbuck Industries proposed investment? (Select the best answer below) that requires an initial outlay of $30,000 and is expected to result in cach inflows of 2,000 aft O A $30,000 $2,000 $7,000 $7,000 $12,000 $8,000 $6.000 B -$30,000 $2,000 $7,000 $7,000 $12,000 $8,000 $6,000 O C. $30,000 -$2.000 -$7.000 -$7,000-$12.000-$8.000 -$6,000 O D. $6.000 $8.000 $12.000 $7.000 $7,000 $2000-$30.000 b. which of the approaches-future value or present value-d0 financal managers rey on most often for decision making why?

Explanation / Answer

Answer for Part a.

Option B.

Cash flows -$30,000 $2,000 $7,000 $12,000 $8,000 $6,000 Year 1 2 3 4 5 6

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