Question

Consider P. Ltd, a one-asset firm with no liabilities. Assume that the asset will generate end-of-year...

Consider P. Ltd, a one-asset firm with no liabilities. Assume that the asset will generate end-of-year cash flows of $200 each year for two years and then will have zero value. The interest rate in the economy is 10% What is the total revenue for the second year?

200

210

220

400

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The answer would be $200 because the P. Ltd. has only single asset which generates cash flows and nothing is there provided which can be considered for calculating revenue of the company. Hence the cash flow generated by that available asset to be taken as Total Revenue for the Year. Here $200 cash flows are for each of two years hence the total revenue for the second year will be $200 also.
The interest rate of 10% can be considered for calculating the present value of the cash flows but it is irrelevant in case of revenues. Hence the only option for the amount to be taken as revenue is $200.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Consider a hypothetical economy that has NO tax. ABC Ltd. is considering investing in a 2-year...
Consider a hypothetical economy that has NO tax. ABC Ltd. is considering investing in a 2-year project which is expected to generate the following year-end cash flows: C1 = $110 million, C2 = $115 million. The yearly discount rate for the project is 10%. The initial cost of the project is $200 million. (f) Now suppose that of the $200m initial expenditure, $50m was used for the purchase of a machine that has an estimated economic life of four years....
Consider an asset expected to generate the following finite set of cash flows.             0                 &nbsp
Consider an asset expected to generate the following finite set of cash flows.             0                      1                      2                      3                      4                      5          years             |---------------     |----------------   |----------------   |----------------   |----------------- |             -$11500           $1500              $7500              $1200              $1200              $4800 As shown on the timeline, the cost of the asset is $11,500. Assume a required rate of return of 10% per year, compounded annually. A.        Calculate the net present value (NPV) of this set of cash flows. B.        Calculate the internal rate of return (IRR)...
A firm acquires an asset for $120,000 at the beginning of year 1. The asset will...
A firm acquires an asset for $120,000 at the beginning of year 1. The asset will generate $50,000 of revenues in each year. For financial reporting purposes, the asset will be depreciated straight line to zero over four years. For tax purposes, it will be depreciated straight line to zero over three years. Assume the firm has no other expenses apart from depreciation expense. The tax rate is 40%. Use this information to answer Questions (7) - (12). 11. The...
Consider a firm that will generate cash flows of $1M for each of the next 3...
Consider a firm that will generate cash flows of $1M for each of the next 3 years. After that, the cash flows will grow at 6% per year forever. What is the value of the firm if the cost of capital is 10%?"
"Consider a firm that will generate cash flows of $1M for each of the next 3...
"Consider a firm that will generate cash flows of $1M for each of the next 3 years. After that, the cash flows will grow at 6% per year forever. What is the value of the firm if the cost of capital is 10%?"
Consider a hypothetical economy that has NO tax. ABC Ltd. is considering investing in a 2-year...
Consider a hypothetical economy that has NO tax. ABC Ltd. is considering investing in a 2-year project which is expected to generate the following year-end cash flows: C1 = $110 million, C2 = $115 million. The yearly discount rate for the project is 10%. The initial cost of the project is $200 million. (a) Compute the profit and NPV of the project. (b) Based on the answer of part (a), should the project be accepted? Explain. (c) ABC’s cut-off period...
You have an opportunity to make an investment that will pay ​$300 at the end of...
You have an opportunity to make an investment that will pay ​$300 at the end of the first​ year, ​$500 at the end of the second​ year, ​$400 at the end of the third​ year, ​$100 at the end of the fourth​ year, and $ 200 at the end of the fifth year. a. Find the present value if the interest rate is 6 percent. ​ b. What would happen to the present value of this stream of cash flows...
Question 1: (25 marks) On 1 July 2015, I Ltd. acquired a 30% interest in one...
Question 1: On 1 July 2015, I Ltd. acquired a 30% interest in one of its suppliers, G Ltd., at a cost of 13,650. The directors of I Ltd. believe they exert 'significant influence' over G Ltd. The equity of G Ltd. at acquisition was: Share capital (20000 shares) $20,000 Retained earnings $10,000 All the identifiable assets and liabilities of G Ltd. at 1 July 2015 were recorded at fair value except for some depreciable non-current assets with a fair...
A project costs $5,000 at t = 0 and will generate annual cash flows of $750...
A project costs $5,000 at t = 0 and will generate annual cash flows of $750 for 10 years, starting at t = 1. The discount rate is 6%. What is the NPV? What is the IRR? (Write down the equation for the IRR and get the solution using Excel or the calculator.) A project costs $5,000 and will generate annual cash flows of $200 in the first year, $300 in the second year and $400 in the third year....
QUESTION 7 Assume a bank has the following balance sheet. Determine the 2-year GAP. Asset Amount...
QUESTION 7 Assume a bank has the following balance sheet. Determine the 2-year GAP. Asset Amount Liability Amount Cash $100 90-day CDS $100 6-month $400 360-day CDs $200 Gbonds $400 Time Deposits $900 2-year 2-year commercial loans 5-year fixed rate loans Total $500 $200 Stockholder s equity Total $1,400 $1,400 GAP = (RSA, Yr – RSLZYP) 0 -$100 -$200 -$300 -$400
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT