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89. Price Mart considering outsourcing its billing operations. A consultant estimates

Question : 89. Price Mart considering outsourcing its billing operations. A consultant estimates : 1412660

 

 

89.

Price Mart is considering outsourcing its billing operations. A consultant estimates that outsourcing should result in after-tax cash savings of $9,000 the first year, $15,000 for the next two years, and $18,000 for the next two years. Interest is at 12%. Assume cash flows occur at the end of the year.

Required: 

Calculate the total present value of the cash flows.


 
 

 

PV of future cash flows

 

 

 

 

90.

Baird Bros. Construction is considering the purchase of a machine at a cost of $125,000. The machine is expected to generate cash flows of $20,000 per year for 10 years and can be sold at the end of 10 years for $10,000. Interest is at 10%. Assume the machine purchase would be paid for on the first day of year one, but that all other cash flows occur at the end of the year. Ignore income tax considerations.

Required: 

Determine if Baird should purchase the machine.


 
 

 



 

 

 

 

Solution
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Accounting 1 Year Ago 30 Views
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