LTI ACCT 202- Routh, Summer 2018 (online) Exam (Module 6: ch. 12, 14) This Quest
ID: 2399447 • Letter: L
Question
LTI ACCT 202- Routh, Summer 2018 (online) Exam (Module 6: ch. 12, 14) This Question: 4 pts 9 of 10 (0 complete) This Test: 59 pts Click the icon to view the present value factor table) Click the icon to view the future value factor table.) (Click the icon to view the present value annuity factor table) (Click the icon to view the future value annuity factor table ) Option #1: S 14,000 000 five years from now Option #2 $2,050,000 at the end of each year for the next six years Option #3: $13,000,000 four years from now Calculate the present value for each payout Option #1 PrintDone The option you would you prefer is the one that has the present value. Therefore the next question 11:50 AM 8 5 6 3Explanation / Answer
Answers
Option #1
Year
PV factor at 8%
Cash Inflow
Present Value of Cash inflow
[A]
[B]
[A x B]
1
0.925925926
$ -
$ -
2
0.85733882
$ -
$ -
3
0.793832241
$ -
$ -
4
0.735029853
$ -
$ -
5
0.680583197
$ 14,000,000
$ 9,528,165
6
0.630169627
$ -
$ -
TOTAL
$ 14,000,000
$ 9,528,165
Option #2
Year
PV factor at 8%
Cash Inflow
Present Value of Cash inflow
[A]
[B]
[A x B]
1
0.925925926
$ 2,050,000
$ 1,898,148
2
0.85733882
$ 2,050,000
$ 1,757,545
3
0.793832241
$ 2,050,000
$ 1,627,356
4
0.735029853
$ 2,050,000
$ 1,506,811
5
0.680583197
$ 2,050,000
$ 1,395,196
6
0.630169627
$ 2,050,000
$ 1,291,848
TOTAL
$ 12,300,000
$ 9,476,903
Option #3
Year
PV factor at 8%
Cash Inflow
Present Value of Cash inflow
[A]
[B]
[A x B]
1
0.925925926
$ -
$ -
2
0.85733882
$ -
$ -
3
0.793832241
$ -
$ -
4
0.735029853
$ 13,000,000
$ 9,555,388
5
0.680583197
$ -
$ -
6
0.630169627
$ -
$ -
TOTAL
$ 13,000,000
$ 9,555,388
Total cash inflow
Total Present Value of cash inflows [ANSWER COLUMN]
Option #1
$ 14,000,000
$ 9,528,165
Option #2
$ 12,300,000
$ 9,476,903
Option #3
$ 13,000,000
$ 9,555,388
The Option that you would prefer is the one that has MAXIMUM/HIGHEST present values. Therefore, Option #3 would be the preferred payout option.
Option #1
Year
PV factor at 8%
Cash Inflow
Present Value of Cash inflow
[A]
[B]
[A x B]
1
0.925925926
$ -
$ -
2
0.85733882
$ -
$ -
3
0.793832241
$ -
$ -
4
0.735029853
$ -
$ -
5
0.680583197
$ 14,000,000
$ 9,528,165
6
0.630169627
$ -
$ -
TOTAL
$ 14,000,000
$ 9,528,165
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