Express Airlines Is Considering the Purchase of an Aircraft to Supplement

question 80

Multiple Choice

Express Airlines is considering the purchase of an aircraft to supplement its current fleet.In estimating the impact of adding this aircraft to the fleet,management has developed the following expected cash flows: If the discount rate is 10 percent,what is the present value of these estimated flows?

• A) $379,080
• B) $224,211
• C) $189,760
• D) $154,869
• E) $199,000

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Definitions:

Operating Activities

These are the day-to-day activities of a business related to its primary operations, such as selling products or providing services, which are reflected in the cash flows of a company.

Cash Flow

The total amount of money being transferred into and out of a business, especially affecting liquidity and overall financial health.

Investing Activities

Transactions and events related to the acquisition and disposal of long-term assets and other investments not considered as cash equivalents.

Consolidated Statement

Financial statements that aggregate the financial information of a parent company and its subsidiaries into one document.