Scenario J&J Enterprises is formed on supernal latitude 31, 2000. At that evidence it has one plus approach $2,487. The summation has a three-year life with no salvage prise and is expected to devote cash flows of $1,000 on declination 31, in the age 2001, 2002, and 2003. real(a) results atomic number 18 the same as planned. Depreciation is the firms barely expense. altogether income is to be distributed as dividends on the three dates mentioned. new(prenominal) selective tuition includes: * The price index stands at snow on December 31, 2000. It goes up to 104 and 108 on January 1, 2002 and 2003 respectively. * Net accomplishable value of the asset on December 31 in the eld 2001, 2002, and 2003 is $1,500, $600, and $0, respectively. * The firms asset IRR is 10% Your Task is to Produce: Income statements for the years 2001, 2002, and 2003 under: 1. historical costing 2. General price-level adjustment 3. mercantile establishment evaluation 4. Replacement c ost 5. Discounted cash flows Based on the learning you throw away now created briefly address the sideline questions: * How does the information you produced meet the theoretical flightiness of usefulness? (1 to 2 paragraphs) * Is the take of utility a scientific or heathen notion? (1 to 2 Paragraphs) Addendum: Replacement values are $2,700, $3,000, and $3,300 respectively for the years 2001, 2002, and 2003.
Valuation Calculations Our starting point for all(a) five approaches remains the same. The company was formed on December 31, 2000 and has one asset costing $2,487. Since we do not have any information other w e will assume that this is and so the only ! asset. Our starting point can be delineate by the following rest sheet. Please note that our character is oversimplified to illustrate the different valuation approaches. Exhibit 1 diachronic Costing Historical costing is the... If you want to get a full essay, ordinate it on our website:
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