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Sloan [31]
3 years ago
6

Dog Up! Franks is looking at a new sausage system with an installed cost of $460,000. This cost will be depreciated straight-lin

e to zero over the project's five-year life, at the end of which the sausage system can be scrapped for $55,000. The sausage system will save the firm $155,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $29,000. If the tax rate is 21 percent and the discount rate is 10 percent, what is the NPV of this project?
Business
1 answer:
Anton [14]3 years ago
7 0

Answer:

The Net Present Value (NPV) of this project is <u>$93,405.59</u>.

Explanation:

Note: Find attached the excel file for the calculation of the NPV of this project.

Net present value (NPV) refers to the present value of cash inflows minus the present value of cash outflows over a specified period of time.

On its own, present value (PV) refers the value that a future sum of money or stream of cash flows has now or currently given a specified rate of return. The formula for calculating the PV is given as follows:

PV = FV / (1 + r)^n

Where,

FV = Future value

r = discount rate. This is given as 10% in this question

n = Relevant period, e.g. year

The above explanation and formula together with other stated formulae in the attached excel file is used in calculating the NPV of this project.

Download xlsx
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If a student attends every management science class, the probability of passing the course is 0.80; but if the student only atte
goldfiish [28.3K]

Answer:

EV of node 4 = 0.6×5 + 0.4×0 = 3

EV of node 5 = 0.1×5 + 0.9×0 = 0.5

EV of node 2 = (0.8×5 + 0.2×EV of node 4) - 3

EV of node 2 = (0.8×5 + 0.2×3 ) - 3

EV of node 2 = 4.6 - 3

EV of node 2 = 1.6

EV of node 3 = (0.5×5 + 0.5×EV of node 5) - 1

EV of node 3 = (0.5×5 + 0.5×0.5 ) - 1

EV of node 3 = 2.75 - 1

EV of node 3 = 1.75

EV of node 3 is higher, therefore, best attend pattern is to attend randomly.

4 0
3 years ago
In an effort to save money for early retirement, an environmental engineering colleague plans to deposit $1,700 per month, start
Ksju [112]

Answer:

$268,696.93

Explanation:

Where an equal amount of money is saved periodically to earn interest at a particular rate of interest to accumulate a target amount in the future , it is called a sinking fund. The purpose could be for retirement, loan repayment or asset acquisition

The sum accumulated (deposit plus interest earned) at the end of the final period is known as the Future Value (FV) of the sinking fund.

The FV is determined as follows:

FV = A × ((1+r/m)^(n× m) - 1)/(r/m))

where FV- future value, A- annual cash flow, r-rate of return, n- number of years, m- number of compounding periods in a year.

<em>so we can apply  this to our question</em>

a = 1700, r - 8%= 0.08, m=4, n- 18

FV = 1,700 ×( (1+0.08/4)^(18 × 4) - 1)/(0.08/4))

     = 1700  × 158.0570

     =$268,696.93

The account will have $268,696.93 at he end of he 18 years

5 0
3 years ago
One problem in the interstate trucking industry is the number of trucks that return empty after making a delivery. There is a we
balu736 [363]

Answer:

Yield management pricing

Explanation:

Yield management pricing is the charging of different prices for a given set of capacity at a specific time in order to maximize revenue. This is based on the demand and supply in the market and is very common in industries such as airlines, hotels and resorts. When there is very high demand for airline seats, prices for them are high. However, if some of those passengers decided to refund their tickets, close to departure and the flight would be taking off soon, instead of flying with empty seats and no revenue from them, the airline would decide to sell these same seats at a cheaper rate in order to gain some revenue. This is a form of revenue maximization.

6 0
3 years ago
Changes in the PPI can predict changes in the consumer price index because
Lelu [443]
Producers often pass along price increases to customer.
5 0
3 years ago
You’ve borrowed $23,072 on margin to buy shares in Ixnay, which is now selling at $41.2 per share. You invest 1,120 shares. Your
BlackZzzverrR [31]

Answer:

(a) Since the percentage margin is more than maintenance margin, there would be no call

(b) A margin call would be received when the price is $15.26

Explanation:

(a) Total investment = $23,072 × \frac{100}{50} = $46,144

Total shares = Total investment ÷ share price

= $46,144 ÷ $41.2 = 1,120

Value of share in market = new price × number of shares

= $41 × 1,120

= $45,920

Value of equity = Value of share in the market - borrowed cash

= $45,920 - $23,072

= $22,848

Percentage margin = Value of equity ÷ Value of shares

= ($22,848 ÷ $45,920) × 100%

= 49.76%

(b) Total number of shares = 1,120

Assumed value of shares = $1,120X

Borrowed fund = $23,072

Value of equity = $1,120X - $23,072

Margin = Value of equity ÷ Value of shares

0.35 = ($1,120X - $23,072) ÷ $1,120X

392X = $1,120X - $23,072

1512X = $23,072

X = $15.26

7 0
3 years ago
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