My ideal mentor should have qualities including the ability and willingness to communicate to others; To be organised and prepare for future questions and to be prepared to help. The ability to listen and to comprehend with people. Being a mentor also means you should continue learning about what's going on in your your own social life school or the world at large. Last point, always be fair and always be kind!
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Answer:
A) IRR, NPV, Payback period
Explanation:
According to Graham and Harvey's 2001 survey, for capital budgeting decision making, the following capital techniques are used which are described below:
Internal rate of return: It is that rate of return in which the net present value is zero that means initial investment and the present value of the annual cash inflows are equal
Net present value: In this method, the initial investment is subtracted from the discounted present value cash inflows. If the amount comes in positive than the project is beneficial for the company otherwise not.
The computation of the Net present value is shown below
= Present value of all yearly cash inflows after applying discount factor - initial investment
The discount factor should be computed by
= 1 ÷ (1 + rate) ^ years
Payback period: It refers to the period in which the initial investment amount should be recovered. It is denoted in years
The formula to compute the payback period is shown below:
= Initial investment ÷ Net cash flow
Answer:
a. The total profit would be positively affected as it increases
Explanation:
1. We calculate the value of revenue per 8000 gallons with the initial chemical compound and processed into the new variant
Revenue Initial Chemical Compound= 8000 gallons X ($52/gallon)
Revenue Initial Chemical Compound=<em><u> $ 416.000</u></em>
Revenue Chemical compound processed into the new variant=8000 gallons X ($83/gallon)
Revenue Chemical compound processed into the new variant= <u><em>$ 664.000</em></u>
2. If we consider that the other production costs will be the same for the two chemical compounds, then the only difference will be the processing cost to refine the basic compound into the new variant. For this reason, we substract only the value of processing the basic compound into the new variant for the revenue of this.
<u><em>$ 664.000 - $160.000= $504.000</em></u>
3. The benefit values for each case are:
Initial Chemical Compound: $416.000
Chemical compound processed into the new variant: $504.000
In conclusion, greater benefit is obtained by processing the basic compound in the new variant than if the basic compound were sold only
Answer
- A) Capital budgeting
- B) Capital Structure
- C) working capital management
Explanation:
- Capital Budgeting: The new product requires investments, therefore businesses are more likely to evaluate the decision of preceding it. So, in brief, it's a method used by companies to assess if a new product should be introduced or not.
<em>Since</em> the company has opted to launch the new product, it has made a capital budgeting decision. In which the company has assessed the risks, benefits and costs associated with the product.
Capital Structure: As the name reflects, businesses have a structure which is a mix of debt + equity to finance the company. Company obliges to identify that where it's investment would come from by assessing its capital after the new product decision is made.
<em>Hence,</em> when company sells it's stock, it is basically creating an investment for its new product.
Working capital management: A process through which companies ensure efficient and effective operations by assessing and managing their working capital. Working capital includes current assets (highly liquid assets) and liabilities.
<em>Therefore,</em> when the company sets its inventory and production levels, it is trying to make its production efficient and effective with sufficient inventory at hand.
Answer:
B), C) and F)
Explanation:
Microeconomics refers to the study of individuals, households, firm behavior for making the decision and distribution of resources. It is useful for the markets that offered goods and services and also handle an individual and economic issues
Therefore in the given case, the microeconomics covered in B, C and F options
