Explain an advantage of having both ethical and sustainable objectives?

B2B co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is

Travka [436]

Answer:

a. 5.85 years

b. 17.5%

Explanation:

a. For the computation of payback period first we need to find out the annual cash flow which is shown below:-

Annual Cash Inflow = Sales - Material - Selling and Administrative Expenses - Income Tax

= $75,000 - $40,000 - $7,500 - $7,000

= $20,500

Payback period = Initial investment ÷ Annual cash flow

= $120,000 ÷ $20,500

= 5.85 years

b. The computation of the accounting rate of return is shown below:-

accounting rate of return = Net income ÷ Average investment

= $10,500 ÷ ($120,000 ÷ 2)

= $10,500 ÷ $60,000

= 17.5%

7 0

4 years ago

Mikkelson Corporation's stock had a required return of 12.50% last year, when the risk-free rate was 3% and the market risk prem

enot [183]

Answer:

a. 16.50%

Explanation:

Find the beta as of last year using CAPM;

CAPM ; r = risk free + beta(Market risk premium)

0.125 = 0.03 + beta(0.0475)

Subtract 0.03 from both sides;

0.125-0.03 = 0.0475beta

0.095 = 0.0475beta

Divide both sides by 0.0475;

0.095/0.0475 = beta

beta = 2

Next, use CAPM again to find the new required return with a market risk premium is 4.75%+ 2% = 6.75%

r = 0.03 + 2(0.0675)

r = 0.03 + 0.135

r = 0.165 or 16.5%

Therefore, the new required return is 16.5%

6 0

3 years ago

Consider an identical basket of goods in both the U.S. and Taiwan. For a given nominal exchange rate, in which case is it certai

Temka [501]

Answer: The price of the basket of goods falls in the U.S. and rises in Taiwan.

Explanation: Exchange rate is the price of a given currency when bought with another another,it is also known as the value of a currency when compared with others such as the United States Dollar. Various factors have been understood to be the cause of the rise and fall of Currency. This will include the value of a country's export and its balance of trade etc

When the price of the basket of goods falls in the United States and rises in Taiwan it will certainly cause the U.S. real exchange rate with TAIWAN to fall.

3 0

3 years ago

Read 2 more answers

One basic difference between "land" and "capital" resources is that land is multiple choice natural, while capital is created by

zhannawk [14.2K]

Natural while capital is man made.

7 0

3 years ago

Assume that IBM leased equipment that was carried at a cost of $92,000 to Carla Vista Company. The term of the lease is 6 years

borishaifa [10]

Answer:

(To record the lease)

Lease Receivable -------- $92,000 (Debit)

Equipment -------- $18,427 (Credit)

(To record the lease first payment)

Cash -------- $92,000 (Debit)

Lease Receivable -------- $18,427 (Credit)

Explanation:

Given:

Lease Amount (Present Value) = $92,000

Rental Payment = $18,427

Term of Lease = 6 years

Equipment Useful Life = 6 years

Implicit Interest Rate = 8%

To prepare IBM's December 31, 2020, we'll make use of the following entries.

To record the lease itself:

1. Lease Receivable (Debit)

2. Equipment (Credit)

To record the lease first payment:

3. Cash (Debit)

4. Lease Receivable (Credit)

Only the first lease payment is considered because the commencement date of the lease is December 31, 2019; Between December 31, 2020 and December 31, 2019, only one payment (i.e. the first payment) is expected to have been recorded.

The recorded entry is as follows;

(To record the lease)

Lease Receivable -------- $92,000 (Debit)

Equipment -------- $18,427 (Credit)

(To record the lease first payment)

Cash -------- $92,000 (Debit)

Lease Receivable -------- $18,427 (Credit)

3 0

3 years ago