Answer:
The Firm should not Buy and Install the press as it delivers a negative NPV of -$24,924 at 11% discount rate over its 4 year operations
Explanation:
The General rule is to appraise the investment based on various appraisal techniques.
A technique that should be considered must have special focus on the time value of money, the required rate of returns expected by the firm and other Cashflow considerations.
The Net Present Value (NPV) approach will be the best method to proceed with.
The NPV approach typically falls under the following decision tree:
a. If NPV is negative (Reject the proposal)
b. If NPV is positive (Accept if it's a singular project, Accept the highest positive NPV if it's for mutually exclusive Projects)
c. If Zero (this is the breakeven line at which the Project covers all its cost but does not return a profit.) Also referred to as the IRR
Kindly refer to the attached for detailed workings
no matteehow much times i read this is still cant process this
Solution:
Barnes Corporation purchased 75 percent of Nobles’ common stock
During the year, Nobles reports net income of $40,000.
Hence, 75% of net income of Nobbles is attributable to Barnes Corporation.
Barnes reports for income from subsidiary prior to consolidation
= 40,000 x 75%
= $30,000
Answer:
the beta of the second stock is 1.77
Explanation:
The beta of the second stock is shown below;
Investment in each = (1 ÷ 3)
Now as we know that
Portfolio beta = Respective investments × Respective weights
1 = (1 ÷ 3 × 1.23) + (1 ÷ 3 × beta of the second stock) + (1 ÷ 3 × 0)
We assume the Beta of risk-free assets would be zero
1 = 0.41 + (1 ÷ 3 × beta of the second stock)
The beta of the second stock is
= (1 - 0.41) × 3
= 1.77
Hence, the beta of the second stock is 1.77