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labwork [276]
3 years ago
8

A small company that specializes in powder coating expanded its building and purchased a new oven that is large enough to handle

automobile frames. The building and oven cost $175,000, but new business from hot-rodders has increased annual income by $520,000. If operating expenses for gas, materials, labor, etc., amount to $470,000 per year, what rate of return will be made on the investment if only the cash flows that occur over the next 4 years are included in the calculation
Business
1 answer:
zubka84 [21]3 years ago
7 0

Answer:

rate 0.= 5.63%

Explanation:

F0 = -175,000 (oven cost)

Then

520,000 additional revenues

<u>-470,000</u> additional expenses

  50,000 net cash flow

We ghave to solve for the rate of return of a 50,000 dollar annuity given it cost 170,000 during four years

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C 50,000.00

time 4

PV $175,000.0000

50000 \times \frac{1-(1+r)^{-4} }{r} = PV\\

We apply the IRR function in excel to get the IRR

=IRR({-175000,50000,50000,50000,50000})

rate 0.055637846 = 5.63%

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3 years ago
.A monopolistically competitive firm is operating at a short-run level of output where price is $30, average total cost is $27,
Neko [114]

Based on the marginal cost and the marginal revenue to this monopolistically competitive firm, in the short run the firm should increase the level of output.

<h3>Why should the firm increase output?</h3>

Firms will maximize their profit if they produce at a point where marginal cost equals marginal revenue.

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2 years ago
Despite ongoing debates about the appropriateness of macroeconomic policies, many macroeconomists have reached a modern consensu
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7 0
3 years ago
Your family is expanding in number, and so you decide to sell your current home and upgrade to a larger home. You estimate that
castortr0y [4]

Answer:

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Explanation:

Data and Calculations:

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Percentage of down payment = 21.05% ($100,000/$475,000 * 100)

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The estimated monthly mortgage payment using an online finance calculator:

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Klio2033 [76]

Answer:

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