Compute the value of cpa company

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PROBLEM - A CPA Co. is an entity explicitly made for a joint venture agreement to extract gold and has corporate life in 3 years. The Net Cash Flow expected during the years it still operates is at P2,000,000 per year.

At the end of its life, CPA Co. estimates to incur P10,000,000 as costs for closure and rehabilitation for its mining site and other costs related to the liquidation process. The cost of capital is set at 10%.

The remaining assets by end of the corporate life will be bought by another company for P20,000,000 and the remaining debt of P4,000,000 will be fully paid off by then.

Required -

1. Compute the Present Value of Cash inflows during years in Operation.

2. Compute the Liquidation Value.

3. Compute the value of CPA Company.

Reference no: EM133038071

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