Present Value Present Value of Net Cash of Net Cash Year Flows Flows $ (136,900) 44,545 40,494 31,878 33,467 30,424 $ (136,900) (92,355) (51,861) (19,983) 13,484 43,908 Initial investment 1. 2. 3. 4. 5. Break-even time years

Present Value Present Value of Net Cash of Net Cash Year Flows Flows $ (136,900) 44,545 40,494 31,878 33,467 30,424 $ (136,900) (92,355) (51,861) (19,983) 13,484 43,908 Initial investment 1. 2. 3. 4. 5. Break-even time years

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A $136,900 initial investment will generate the following present values of net cash flows. What is the break-even time for this investment? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Round "Break-even time" answer to 1 decimal place.) See photo for additional information

Present Value Present Value
of Net Cash
of Net Cash
Year
Flows
Flows
$ (136,900)
44,545
40,494
31,878
33,467
30,424
$ (136,900)
(92,355)
(51,861)
(19,983)
13,484
43,908
Initial investment
1.
2.
3.
4.
5.
Break-even time
years

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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