The value in use of a network of charging stations owned by Bérivane is sensitive to the term structure of interest rates. The expected pre-tax net cash flows are 42,000 at the end of year 1 and 60,500 at the end of year 2. The appropriate pre-tax rates are 5 % for the one-year maturity and 10 % a year for the two-year maturity; each cash flow is discounted at the annual rate for its own maturity. Calculate value in use.
- Net cash flow for year 1
- 42,000
- Net cash flow for year 2
- 60,500
- One-year pre-tax rate
- 5 %
- Two-year annual pre-tax rate
- 10 %