If a Manager Has Determined That a Particular Piece of Capital

question 53

Essay

If a manager has determined that a particular piece of capital is likely to increase the cash flow of a business by $10,000 for the next five years, what is the present value of the capital at an interest rate of 10 percent? (Assume that the cash flow first increases one year from today.)

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Definitions:

Revenue

The total income generated by a business from its normal business operations, including sales of goods and services.

Planning Budget

A budget formulated at the beginning of the budgeting period that is based on planned operations and outputs.

Revenue

The total amount of income generated by the sale of goods or services related to a company's primary operations.

Planning Budget

A budget created at the beginning of a period, based on estimates of revenues and expenses.