1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
jasenka [17]
3 years ago
5

Identify the simplifying assumptions usually made in net present value analysis. (You may select more than one answer. Single cl

ick the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)
A. All cash flows other than the initial investment occur at the end of periods.unchecked
B. All cash flows generated by the investment project are immediately reinvested at a rate of return greater than the discount rate.unchecked
C. All cash flows generated by the investment project are immediately reinvested at a rate of return equal to the discount rate.unchecked
D. All cash flows occur at the beginning of the periods.unchecked
E. The time value of money is ignored when evaluating investment proposals under the net present value analysis.
Business
1 answer:
Ne4ueva [31]3 years ago
7 0

Answer: A. All cash flows other than the initial investment occur at the end of periods.

C. All cash flows generated by the investment project are immediately reinvested at a rate of return equal to the discount rate.

Explanation:

The Net Present Value is one of the most popular Capital Budgeting methods used in Project analysis. It works by subtracting the cost of an investment from the present value of it's future cashflows.

One assumption it makes is that the cashflows occur at the end of each period. This allows for easier calculations as partial discounting will not be done but rather full discounting for the year.

Another key assumption it makes its that the cashflows generated from the project are reinvested at the Cost of Capital which is a rate of return equal to the discount rate. This is why all cashflows are discounted at this rate of return.

You might be interested in
Which of the following is an example of capital outflow for Germany?a. German company Haribo sells a production facility in Irel
Drupady [299]

Answer:

c. GM sells stock in Audi to German resident

Explanation:

It means a capital outflow for Germany because a foreing company to Germany sells its shareholding position in a German Company,

the sale means that a German Resident gives money to a foreign company in exchange for the Audi shares.

7 0
3 years ago
McGuire Company acquired 100 percent of the voting common shares of Able Corporation by issuing bonds with a par value and fair
-Dominant- [34]

Answer: $650,000

Explanation:

Given that,

Fair and par value of issued bonds = $150,000

Prior acquisition, McGuire reported

Total assets = $500,000

Liabilities = $280,000

Stockholders’ equity = $220,000

At that date, Able reported

Total assets = $400,000

Liabilities = $250,000

Stockholders’ equity = $150,000

Account payable to McGuire = $20,000

Total assets reported by McGuire after acquisition:

= Total assets + Fair value of investment

= $500,000 + $150,000

= $650,000

4 0
3 years ago
Eric and Sharaveen Rush filed a claim alleging violations of the Fair Credit Reporting Act arising out of an allegedly erroneous
SVEN [57.7K]

Answer:

Macy is liable. The Federal Trade Commission states that both the credit rating agency and Macy's are responsible for correcting the erroneous credit report. It is very hard to sue and win a credit rating agency because they will place the blame on the company that made the initial mistake (Macy's), but lately courts have accepted cases against the companies that cause all this mess.

Courts have lately ruled in favor people alleging that a bad credit report damaged them since a good credit rating is considered an intangible asset. The company that cause the mistakes are liable for any possible damages resulting from a poor credit rating.

8 0
3 years ago
An investor has sold 1 ABC Jan 50 Call and has bought 1 ABC Apr 60 Call. This is a:________.
Kitty [74]

Answer:

diagonal spread

Explanation:

Spread is basically a sale and purchase of a call. So here the the types of spreads determine the relationship between the strike price and the expiration dates of all options involved in the trade.

In this example investor has sold 1 ABC Jan 50 Call and has bought 1 ABC Apr 60 Call. This means he bought the option ABC with the longer expiration date and with a higher strike price and sold the option ABC with the near expiration date and the lower strike price. Here both the expiration and strike price are different. So this is an example of diagonal spread.

The option horizontal spread is incorrect because it is a spread that depicts the difference in expiration dates but strike price is the same. Here both the expiration and strike price are different.

The option straddle is incorrect because it is a spread in which both options have the same expiry date and same strike price. Here both the expiration and strike price are different.

The option dialogue spread is not a valid option too.

The option Combination is also suitable because this is an example of Combination and combinations include option spread trades such as vertical spreads, horizontal spreads, and diagonal spreads.

So the most suitable option is diagonal spread which is an example of Combination.

5 0
3 years ago
At Onyx incorporated, direct materials are added at the beginning of the process and conversions costs are uniformly applied. Ot
PIT_PIT [208]

Answer:

A $660,030

Explanation:

Total cost of units completed and transferred out = Units Completed and Transferred x Cost per Equivalent Unit

Therefore,

Total cost of units completed and transferred out = 117,000

5 0
3 years ago
Other questions:
  • Alexandra owns a small landscaping business. She hires a​ part-time employee to handle the bookkeeping activities. Which factor
    8·2 answers
  • Fey Corporation has aged its accounts receivable and estimated uncollectible accounts as follows (in thousands). What bad debt e
    6·1 answer
  • Paul Sabin organized Sabin Electronics 10 years ago to produceand sell several electronic devices on which he had securedpatents
    9·1 answer
  • In your opinion how have human rights changed from the industrial revolution till the modern economy of today
    9·1 answer
  • Due to the terms of its​ lease, ​Services, Inc., pays the rent for its new office space in one annual payment of on ​1, . The le
    12·1 answer
  • The world’s poor are disproportionately affected by environmental degradation and lack of access to clean, affordable energy ser
    15·2 answers
  • The money paid to stockholders from the corporation's profit is known as
    15·1 answer
  • Assume that the cost of aluminum used by​ soft-drink companies increases. Indicate which of the following statements describing
    11·1 answer
  • In its first year of operations, Roma Company reports the following. Earned revenues of $63,000 ($55,000 cash received from cust
    15·1 answer
  • Zappos, the online shoe and clothing marketer, promises free shipping and free returns on any of its products, no questions aske
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!