Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. questions 24 and 25 refer to the problem below.

Questions 24 and 25 refer to the problem below. A businessman is contemplating...

60.1K

Verified Solution

Question

Accounting

Questions 24 and 25 refer to the problem below.
A businessman is contemplating purchasing a company for R950000. The company is expected to operate for 3 years, and the following profits are expected:
\table[[YEAR,PROFIT (R),DISCOUNT FACTOR,PRESENT VALUE (R)],[1,450000,0.909,409050],[2,740000,J,611240],[3,890000,0.751,668390],[S,,,D]]
A company of this type is expected to return a yearly profit of 10%.
QUESTION 24
(4 Marks)
The missing values J and D, respectively, are:
A.0.826 and 1688680
.0.859 and 1688680
c.0.826 and 1563290
o.0.793 and 1688680
QUESTION 25
(4 Marks)
What should be the final decision?
4. Do not buy the company since there is a nett loss of R738680
s. Buy the company since there is a nett profit of R648680
c. Buy the company since there is a nett profit of R738680
. Do not buy the company since there is a nett loss of R 648680
image

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students