What is the present value of this series of payments

Assignment Help Accounting Basics
Reference no: EM132620537

Question - Baro Electronics PLC is considering selling to a well-known supermarket chain the right to market its electronic security system. The proposed deal calls for the supermarket chain to pay Baro Br. 10,000 and Br. 25,000 at the end of years 1 and 2 and to make annual year-end payments of Br. 25,000 in years 3 through 9. A final payment to Baro of Br. 30,000 would be due at the end of year 10. The applicable discount rate for the first two years is 12%; whereas, 15% then after for the remaining years.

Required -

(a) Lay out the cash flows involved in the offer on a time line.

(b) What is the present value of this series of payments?

(c) A second company has offered Baro an immediate one-time payment of Br. 141,168 for the rights to market the electronic security system. Which offer should Baro accept?

Reference no: EM132620537

Questions Cloud

Critical thinking skills should be incorporated : Discuss at least two justification defenses. Work must be well written and critical thinking skills should be incorporated.
How many units were completed in december : Ending work in process inventory (6,000 units), $35,000. How many units were completed in December? How many units were sold in December
How many chandeliers of each type should be made to profit : How many chandeliers of each type should be made to maximize profit if the profit is P5,000 for each standard type sold and P7,000 for each premium type sold
Explain the criminal justice wedding cake concept : Explain the criminal justice "wedding cake" concept. Explain the due process and crime control models
What is the present value of this series of payments : The proposed deal calls for the supermarket chain to pay Baro Br. 10,000. What is the present value of this series of payments
Identify some examples of civilian jobs : Civilian: Identify some examples of "civilian" jobs found in a local law enforcement agency.
Representative of integrity and ethics in police leadership : A description of one element representative of integrity and ethics in police leadership.
Some limitations of the selected low biometric : Biometrics is considered the science of life measurement. What are some limitations of the selected low biometric?
Program evaluation : Program evaluation is the use of social research methods and techniques to analyze public programs.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd