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2 years ago

The net present value (NPV) method estimates how much a potential project will contribute to

Business

1 answer:

lapo4ka [179]2 years ago

6 0

This answer requires that we fill in the blanks

The net present value (NPV) method estimates how much a potential project will contribute to shareholder wealth
The larger the NPV, the more value the project adds; and added value means a higher stock price.
The NPV calculation assumes that cash inflows can be reinvested at the project's risk-adjusted WACC
When the firm is considering independent projects, if the project's NPV exceeds zero the firm should accept the project.
When the firm is considering mutually exclusive projects, the firm should accept the project with the higher positive NPV.

What is the NPV?

In order to get the NPV we have to make the following calculations for the projects A and B.

This is calculated as

Project A

-900 + 620/1.08 + 395/1.08² + 200/1.08³ + 250/1.08⁴

= $355. 237

For the project B

We would have to perform similar calculation

Hence we would have

-900 + 620/1.08 + 395/1.08² + 200/1.08³ + 250/1.08⁴

= 378.98

From the calculations that we have done above, we can see that the value for project B is greater hence we have to choose project B.

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Rashan's family is always telling him he's worthless and will never be successful at anything he does. Eventually, he reaches a

Ivenika [448]

Answer:

Self-esteem

Explanation:

Self-esteem is a person's evaluation of their worth. This evaluation is subjective as it may not be based on reality. Self-esteem is influenced by one's environment including peer groups, family, and coworkers.

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Rashan's self-esteem has gone low as he now believes what his family is telling him. That he is worthless.

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3 years ago

Biscayne Bay Water Inc. bottles and distributes spring water. On May 14 of the current year, Biscayne Bay Water Inc. reacquired

nordsb [41]

Answer:

treasury stock 1,645,600 debit

cash 1,645,600 credit

--to record he purchase of TS--

cash 925,000 debit

treasury stock 850,000 debit

additional paid-in TS 75,000 debit

-to record sale of TS above their cost--

cash 760,500 debit

additional paid-in TS 35,100 debit

Treasury Stock 795,600 credit

Explanation:

<em><u>treasury stock cost:</u></em>

24,200 shares x $68 each = 1,645,600

sale of TS

proceeds: 12,500 x $74 =925,000

cost: 12,500 x $68 = 850,000

additional paid-in TS 75,000

second sale of TS:

proceeds _ 11,700 x $65 760,500

Cost: 11,700 x $68 795,600

additional paid-in TS 35,100

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2 years ago

(a) how are bonds rated? (b) how are these rating helpful to the investors?

Jet001 [13]

Answer:

a) Bond rating is done by evaluating and considering all the relevant internal as well as external factors associated with the financial status of a business.

b) Bond rating helps in analysing the risk associated with the bond by analyzing its credit quality and thus helps investors taking decisions related to their investments.

Explanation:

a) Bond-rating is the letter grading system that is used to indicate the quality of the credit-related to the bond of various organizations. Bond-rating is done by evaluating and considering all the relevant internal as well as external factors associated with the financial status of a business. Internal factors may include the financial strength of the organization. External factors may include various networks with interested investors and other government organizations and policies related to the same.

There are three important agencies that analyze the credit quality of a bond. These agencies are Standard & Poor's, Moody's, and Fitch rating Inc.

b) Bond-rating help in analyzing the risk associated with the bond by analyzing its credit quality and thus helps investors taking decisions related to their investments. It helps the investors to study the stability and quality of a bond. Hence, higher-rated bonds are considered to be more stable and appropriate for investment purposes.

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3 years ago

Palencia Paints Corporation has a target capital structure of 35% debt and 65% common equity, with no preferred stock. Its befor

Arturiano [62]

Answer:

Cost of common equity is 15.7% and WACC is 7.2%

Explanation:

D1 is

D1= 2.25 (1+0.05)

The cost of common equity is

Rs = 2.36/ 22.00 + 5% =0.157= 15.7%

The cost of common equity is weighted average cost of capital (WACC)

WACC = (0.35) * (0.08) (1- 0.40) + 0 preferred stock+ (0.35) * (0.157)

WACC = 0.03 *0.6 + 0 + 0.054

WACC = 0.018 + 0.054

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3 years ago

Dunphy Company issued $20,000 of 8.5%, 10-year bonds at par value on January 1. Interest is paid semiannually each June 30 and D

Rashid [163]

Answer:

(a)

January 1 Cash 20000 Dr

Bonds Payable 20000 Cr

(b)

June 30 Interest expense 850 Dr

Cash 850 Dr

Explanation:

The bonds are issued at par value thus full cash equal to the par value of these bonds will be received on the issuance date.

The ineterst is paid at 8.5% annually. The annual interest oayment equals 20000 * 0.085 = 1700

As this is paid semiannually in equal installments, the semi annual payment for interest on June 30 will be 1700 / 2 = $850

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3 years ago