What is the value today of the cash flows

Assignment Help Financial Management

Reference no: EM131989315

Southern California Publishing Company is trying to decide whether to revise its popular textbook, Financial Psychoanalysis Made Simple. The company has estimated that the revision will cost $95,000.

Cash flows from increased sales will be $22,000 the first year. These cash flows will increase by 5 percent per year.

The book will go out of print six years from now. Assume that the initial cost is paid now and revenues are received at the end of each year.

If the company requires a return of 12 percent for such an investment, what is the value today of the cash flows?

Reference no: EM131989315

Questions Cloud

Globalization of business good or bad for the united states : Is the increasing globalization of business good or bad for the United States? If you are from a different country, what effect do you think globalization

What is the total contribution to sophias account every year : Sophia works for a large corporation with a 401(k) retirement plan. The company matches dollar-for-dollar the first 7% of every employee's salary .

Calculate average-cost per unit : Calculate average-cost per unit. Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO.

Calculate the present value of the cash inflows of project : If the company requires a return of 8 percent for such an investment, calculate the present value of the cash inflows of the project.

What is the value today of the cash flows : The book will go out of print six years from now. Assume that the initial cost is paid now and revenues are received at the end of each year.

Find the after-tax cash flow for each year using macrs : The cor- porate tax rate is 40 percent. Find the after-tax cash flow for each year using MACRS GDS allowances.

What would be the effect on total production : Assume complete? specialization, where China produces only toys and France produces only wine. What would be the effect on total production?

Peak inventory and cycle time : One of the tutors previously provided a great answer, but can you elaborate on "Peak Inventory" and "Cycle Time". Please see original question and the answer

What is the break-even point between option one and two : Assume the firm will sell the same number of watches in each year. What is the break-even point between option 1 and 2?

User Account

All Pages