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nexus9112 [7]
3 years ago
9

Phillips industries runs a small manufacturing operation. for this fiscal year, it expects real net cash flows of $197,000. the

company is an ongoing operation, but it expects competitive pressures to erode its real net cash flows at 6 percent per year in perpetuity. the appropriate real discount rate for the company is 11 percent. all net cash flows are received at year-end. what is the present value of the net cash flows from the company's operations?
Business
1 answer:
Stolb23 [73]3 years ago
8 0

Answer: Present value of the cash flows of the company is $1,158,824.

Explanation: Philips industries have the cash flow for $197,000. The industry needs to find the present value of the cash flow and the cash flows growth is decreasing every year by 6%.

The present value of the cash flows for perpetuity with decreasing growth rate is:

Present value = Cash flow for year 1 (C1) / (discount rate - growth)

where, Cash flow for the year 1 (C1) = $197,000

Discount rate (r) = 11%

Growth rate (g) = -6%

Present value of the cash flows (PV) = $197000/[0.11 - (-0.060)]

Present value of the cash flows (PV) = $197000/0.17

Present value of the cash flows (PV) = $1,158,824

Therefore the present value of the cash flows of the company is $1,158,824.

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Sophia's Restaurant served 5,000 meals last quarter. Sophia recorded the following costs with those meals. Variable costs: Ingre
Anna007 [38]

Answer:

The answer is below

Explanation:

Total Variable cost = Ingredients used + Direct labor + Indirect materials and supplies + Utilities = $14,000  +$10,500  + $5,300  + $1,700  = $31,500

Total Fixed cost =  Managers' salaries + Rent + Depreciation on equipment (straight-line, time basis) + Other fixed costs =  $22,000  + $18,000  + $2,000  + $3,000 =  $45,000

Total cost = Total Variable cost + Total fixed cost + $31500 + $45000 = $76500

Unit costs = Total cost / Number of meals = $76500 / 4500 meals = $15.30 per meal

5 0
3 years ago
You gave $770 to your cousin. As a token of gratitude, your cousin gave you $1,190 at the end of the year instead of $770. If yo
Kamila [148]

Answer:

annual rate of return  = 54.55%

Explanation:

given data

gave to your cousin present value = $770

cousin give you future value = $1190

solution

we get here annual rate of return that is express as

annual rate of return = \frac{future\ value}{present\ value} - 1    ...................1

put here value and we get

annual rate of return = \frac{1190}{770} - 1

solve it we get

annual rate of return  = 54.55%

7 0
3 years ago
15. When you buy a U.S. Savings Bond you are
yulyashka [42]

<u>Answer:</u> When you buy a U.S. Savings Bond you are  loaning money to

the government.

<u>Explanation:</u>

Savings bond means the debt securities which the government issues to the public in order to borrow money for government funds. US savings bond are a safe financial instrument that people can consider investing. On buying a bond you loan money to the government and the government pays back interest for the borrowed money. The bond can be sold on its maturity to the government.

This is also a tax free on the interest that is received. These bonds can be purchased in the online electronic form.

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The correct option is C.
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6 0
4 years ago
2 features of private limited companies.
Nata [24]

Answer: (1) Legal entity

(2) Perpetual existence

Explanation: A very simple definition of a private limited company would help with subsequent explanation of its features or characteristics.

A private limited company is a business organization with private ownership being held by a few parties known as the shareholders, and these ones have their liability limited to the amount of shares contributed to the business capital. The total membership of owners is limited and hence the name "private."

There are a quite a number of features of a private limited company and two of these are;

(1) Legal Entity

(2) Perpetual Existence

(1) Legal Entity:

Once an organization has been registered as a "limited liability company," it immediately takes it own identity. What this means is that the laws of the country now recognizes the company as an individual with its own name and identity and is clearly distinct from the shareholders (owners of the company). This means the private limited company can have a bank account opened in its own name, it can sue and be sued to court in its own name (and not in the name of the shareholders), and so on. Basically, legal  entity implies that a private limited company is now a person on his/her own and all matters that concern the business organization shall be seen as the company. Hence all assets and liabilities belong to the company and not the shareholders.

(2) Perpetual Existence:

Perpetual or continuous existence as the name implies means the company can continue to remain in existence into the foreseeable future and no time limit can affect it. Also the death or exit of one or more members (shareholders) cannot affect the existence of the company. So if for example, one members retires and exits the company and later dies as a result of old age, with or without replacement of the ex member, the company continues to exist uninterrupted (remember the company is now a person on its own under the law). This explains why many multinationals such as banks and oil and gas producing companies have been in existence for decades and some close to two hundred years in existence (and still counting).

7 0
3 years ago
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