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    Finance Scenario

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    YJ Enterprises is formed on December 31, 2000. At that point it has one asset costing $2,487. The asset has a three-year life with no salvage value and is expected to generate cash flows of $1,000 on December 31, in the years 2001, 2002, and 2003. Actual results are the same as planned. Depreciation is the firm's only expense. All income is to be distributed as dividends on the three dates mentioned. Other information includes:

    The price index stands at 100 on December 31, 2000. It goes up to 104 and 108 on January 1, 2002 and 2003 respectively.

    Net realizable value of the asset on December 31 in the years 2001, 2002, and 2003 is $1,500, $600, and $0, respectively.

    The firm's asset IRR is 10%
    Your Task is to Produce:

    Income statements for the years 2001, 2002, and 2003 under:

    Historical costing

    General price-level adjustment

    Exit valuation

    Replacement cost

    Discounted cash flows
    Based on the information you have now created briefly address the following questions:

    How does the information you produced meet the theoretical notion of "usefulness?"

    Is the construct of utility a scientific or cultural notion?

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    Solution Preview

    The response addresses the queries posted in 254 words with references.

    // It is true that for any kind of decisions, certain information is prerequisite. Thus, it is necessary that before doing any job, it should be seen whether information is available or not. So, we will here make discussion about theoretical notion of usefulness and constriction of utility function.//

    Every decision is based on some information. The relevancy and accuracy ...

    Solution Summary

    The response addresses the queries posted in 254 words with references.