Author Question: Express Airlines is considering the purchase of an aircraft to supplement its current fleet. In ... (Read 141 times)

Metfan725 · **on:** Jul 10, 2018

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:

Year Cash Flow
1 -1,000
2 100,000
3 100,000
4 100,000
5 100,000
6 100,000
7 -300,000

If the discount rate is 10, what is the present value of these estimated flows? (Round to the nearest whole dollar)
A) 379,080
B) 224,211
C) 189,760
D) 154,869
E) 199,000

Question 2

When real property is used as collateral for a bond, it is termed a/an ________.

A) debenture
B) mortgaged security
C) indenture
D) senior bond