Exercise 2 (Basic Present Value Concepts)Each of the following parts is independent. (Ignore income taxes.)1. Amano Freightlines plans to build a new garage in three years to havemore space for repairing its trucks. The garage will cost P400,000. Whatlump-sum amount should the company invest now to have the P400,000available at the end of the three-year period? Assume that the companycan invest money at:Eight percent.b. Twelve percent.а.2. Lorna Products, Inc., can purchase a new copier that will save P5,000 peryear in copying costs. The copier will last for six years and have nosalvage value. What is the maximum purchase price that Lorna Productswould be willing to pay for the copier if the company's required rate ofreturn is:Ten percent?b. Sixteen percent?а.3. Tom has just won the million-peso slot machine jackpot at a gamblingcasino. The casino will pay her P50,000 per year for 20 years 'as thepayoff. If Tom can invest money at a 10% rate of return, what is thepresent value of her winnings? Did she really win a million pesos?Explain.

NOTE : As per BARTLEBY guidelines, when multiple questions are given then first question is to be…

Exercise 2 (Basic Present Value Concepts) Each of the following parts is independent. (Ignore income taxes.) 1. Amano Freightlines plans to build a new garage in three years to have more space for repairing its trucks. The garage will cost P400,000. What lump-sum amount should the company invest now to have the P400,000 available at the end of the three-year period? Assume that the company can invest money at: Eight percent. b. Twelve percent. а.

Exercise 2 (Basic Present Value Concepts) Each of the following parts is independent. (Ignore income taxes.) 1. Amano Freightlines plans to build a new garage in three years to have more space for repairing its trucks. The garage will cost P400,000. What lump-sum amount should the company invest now to have the P400,000 available at the end of the three-year period? Assume that the company can invest money at: Eight percent. b. Twelve percent. а.

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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Exercise 2 (Basic Present Value Concepts) Each of the following parts is independent. (Ignore income taxes.) 1. Amano Freightlines plans to build a new garage in three years to have more space for repairing its trucks. The garage will cost P400,000. What lump-sum amount should the company invest now to have the P400,000 available at the end of the three-year period? Assume that the company can invest money at: a. Eight percent. b. Twelve percent. 2. Lorna Products, Inc., can purchase a new copier that will save P5,000 per year in copying costs. The copier will last for six years and have no salvage value. What is the maximum purchase price that Lorna Products would be willing to pay for the copier if the company's required rate of return is: a. Ten percent? b. Sixteen percent? 3. Tom has just won the million-peso slot machine jackpot at a gambling casino. The casino will pay her P50,000 per year for 20 years as the payoff. If Tom can invest money at a 10% rate of return, what is the…
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2.-DO IT IN EXCEL, AND SHOW THE FORMULASIf the company purchases the machine, its cost of $276,000 will be financed with a loan at 14.8% interest for three years requiring equal annual payments including principal and interest. The machine will be depreciated at 20% per year. The company will pay $8,000 per year for maintenance services. The company plans to keep the machine even after its payback period.What is the amount of the annual payment? A) $120,480.90 B) $85,442.71 C) $276,000.00 D) $361,442.71
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