VALUATION METHOD: DISCOUNTED CASH FLOW METHODHow much is the net present value of the Net Cash Flows, using discount rate of 10%? Pawikan Corp. reported the following information:Net Cash FlowsPhp 250Php 300Php 350Year123

Net present value = Year 1 cash flow/(1 + Discount rate) + Year 2 cash flow/(1 + Discount rate)^2 +…

Answered: Pawikan Corp. reported the following…

Business

Accounting

Pawikan Corp. reported the following information: Year Net Cash Flows Php 250 Php 300 Php 350 1 2/3

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter11: The Statement Of Cash Flows

Section: Chapter Questions

Problem 10MCQ

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

VALUATION METHOD: DISCOUNTED CASH FLOW METHOD

How much is the net present value of the Net Cash Flows, using discount rate of 10%?

Pawikan Corp. reported the following information:
Net Cash Flows
Php 250
Php 300
Php 350
Year
1
2
3

Definition Definition Calculation used to evaluate the investment and financing decisions that involve cash flows occurring over multiple periods. NPV is calculated as the difference between the present value of cash inflow and cash outflow. NPV is used for capital budgeting and investment planning as well as to compare similar investment alternatives.

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