At he end of 2005, Uma Corporation was considering undertaking a major long-term project in an effort to remain competitive in its industry. The production;and sales departments determined the potential annual cash flow savings that could accrue to he firm if it acts soon. Specifically, they estimate that a mixed stream of future;cash flow savings will occur at the end of the years 2006 through 2011. The years 2012 through 2016 will see consecutive and equal cash flow savings at the end;of each year. The firm estimates that its discount rate over the first 6 years will be 7%. The expected discount rate over the years 2012 through 20156 will be 11%;The project managers will find the project acceptable if it results in present cash flow savings of at least $860,000. The following data is available to assist you;a) Determine the value - at the beginning of 2006 - of the future cash flow savings expected to be generated by this project.
Paper#22360 | Written in 18-Jul-2015Price : $27