a. Determine the amount that Polaris invested in capital assets for that year. (

Question

a. Determine the amount that Polaris invested in capital assets for that year. (Hint: Refer to the statement of cash flows). b. Assume a ten-year life and a 10% internal rate of return. What is the amount of cash flows that Polaris must earn on these new projects? Investing Activities: (2015) Purchase of property and equipment ........................ (251,401); Investment in finance affiliate ............................. (19,251); Distributions from finance affiliate.......................... 12,005; Investment in other affiliates .............................. (10,934); Proceeds from sale of investments . . . . . . . . . . . . . . . . . . . . . . . . . . 0 Acquisition of businesses, net of cash acquired ................. (137,104); Net cash used for investing activities............................ (406,685)

Explanation / Answer

YearDiscount Rate 10%

1   0.9091

2 0.8264

3 0.7513

4 0.6830

5   0.6209

6 0.5645

7 0.5132

8 0.4665

9 0.4241

10 0.3855

Total =6.1446Initial Investment =$2,120,000Annual Cash Flow =$345,020

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