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
Wittaler [7]
3 years ago
10

McCann Co. has identified an investment project with the following cash flows.

Business
2 answers:
Vlada [557]3 years ago
8 0

Answer:

Present values @ 11%

Years   Present Value

1               $775

2              $982

3              $1075

4              $1070

Present values @ 16%

Years   Present Value

1               $741

2              $899

3              $942

4              $897

c.

Present values @ 30%

Years   Present Value

1               $662

2              $716

3              $669

4              $569

Explanation:

Cash flows that will be received in future do not have same value as today, because if received today there is an opportunity to reinvest it and get some return. For this reason we calculate the present value of future cash flow.

Discounting method is used to calculate the present values. using following formula of discounting we calculate the PV.

PV  = FV / ( 1 + r )^n

a.

Present values @ 11%

Years   Cash Flows      Discounting       Present Value

1               $860         860 x ( 1 + 11%)^-1            $775

2              $1,210        1,210 x ( 1 + 11%)^-2         $982

3              $1,470        1,470 x ( 1 + 11%)^-3        $1075

4              $1,625        1,625 x ( 1 + 11%)^-4       $1070

b.

Present values @ 16%

Years   Cash Flows      Discounting       Present Value

1               $860         860 x ( 1 + 16%)^-1            $741

2              $1,210        1,210 x ( 1 + 16%)^-2         $899

3              $1,470        1,470 x ( 1 + 16%)^-3        $942

4              $1,625        1,625 x ( 1 + 16%)^-4       $897

c.

Present values @ 30%

Years   Cash Flows      Discounting       Present Value

1               $860         860 x ( 1 + 30%)^-1           $662

2              $1,210        1,210 x ( 1 + 30%)^-2         $716

3              $1,470        1,470 x ( 1 + 30%)^-3        $669

4              $1,625        1,625 x ( 1 + 30%)^-4       $569

As the discount rate increase the Present value of the cash flows  decreases because of discounting factor.

Ugo [173]3 years ago
7 0

Answer:

The present value at 11% is $3,902.13,$3,479.85  at 16% and $2,615.57  at 30%

Explanation:

The present value formula is given as :

PV=FV/(1+r)^n

Where FV is the future value of cash flows such as the ones given in the question

r is the rate of return at 11%,16% and 30%

n is the applicable time horizon relevant to each of the cash flow.

Find attached spreadsheet for detailed calculations.

Download xlsx
You might be interested in
Which career would organize, train, and support teachers and educational workers to help them provide better
Tresset [83]

Answer:

(C)

Explanation:

Hope It Helps  ;)

7 0
3 years ago
Read 2 more answers
On November 1, 2021, Sandhill Co. places a new asset into service. The cost of the asset is $84000 with an estimated 10-year lif
Aneli [31]

Answer:

$7,200

Explanation:

According to the scenario, computation of the given data are as follows,

Total cost = $84,000

Salvage value = $12,000

Estimated life = 10 years

So, we can calculate depreciation expense by using following formula,

Depreciation yearly = (Total cost - Salvage value) ÷ Estimated life

= ($84,000 - $12,000) ÷ 10

= $72,000 ÷ 10

= $7,200

7 0
3 years ago
Assume the world market for oil is competitive and that the marginal cost of producing another barrel of oil is $79.40 and the m
Alona [7]

Answer:

b. Increase by $2.20

Explanation:

Economic Surplus is the total benefit to society from production.

If an additional unit is produced the additional cost will be $79.40 and it will the additional benefit of $81.60.

So the surplus = benefit - cost = $81.60 - $79.40 = $.2.20

They are marginal quantities (change made by additional unit) so everything has been taken into account for the deriving of change to surplus.

3 0
3 years ago
The period manufacturing costs of a company is comprised of $2,000,000 in direct materials, $1,000,000 in direct labor, and $500
shutvik [7]

Answer:

The Direct material cost per unit is = 285.714 per unit

The  Direct labor per unit is= 142.857 per unit

The Overhead cost per unit is  = 71.4285 per unit

Explanation:

Solution

We recall that:

The total direct material= $2000000

The total direct labor= $1000000

The units in products = 7000 units

The total Overheads= $500000

Now,

The direct materials on machinery is = $ 800,000(40%)

The direct labor on machinery  is= $ 600,000(60 %)

The machinery on overheard  is = $ 250,000(50 %)

The direct materials on assembly is  = $ 1200,000

The Direct labor on assembly is  = $ 400,000

The Overhead on assembly  is = $ 250,000

Thus,

The hybrid manufacturing cost statement is represented or shown below

Particular   Machinery (40%)in $     Assembly (60%)in $  Total in $

Now,

Particular = Direct material,

Machinery (40%)in $  = 800000

Assembly 60% in $ = 1200000

Total in $ =2000000

Grand total = 1650000

Particular = labor

Machinery (40%)in $  = 600000

Assembly 60% in $  = 400000

Total in $ = 1000000

Grand total = 1850000

Particulars = Overhead

Machinery (40%)in $ =250000

Assembly 60% in $ = 250000

Total in $ = 500000

Grand total = 3500000

Thus,

The Direct material cost per unit = 2000000/7000 = 285.714 per unit

The  Direct labor per unit = 1000000/700 = 142.857 per unit

The Overhead cost per unit = 500000/7 = 71.4285 per unit

3 0
3 years ago
What environmental advantages would there be in having fewer transactions?
ra1l [238]

Answer:

Less Of an Imcome

Explanation:

4 0
3 years ago
Other questions:
  • On January 2, 2020, Howdy Doody Corporation purchased 12% of Ranger Corporation's common stock for $50,000. Ranger's net income
    15·1 answer
  • Healthy Foods just paid its annual dividend of $1.62 a share. The firm recently announced that all future dividends will be incr
    8·1 answer
  • ator Corporation manufactures several types of accessories. For the year, the gloves and mittens line had sales of $494,000, var
    8·2 answers
  • Which concept do businesses Which professional source provides entrepreneurs with expertise and knowledge about buying an existi
    9·1 answer
  • Gasoline prices increase by 50 percent and other things remain the same. as a result, there is no change in the quantity of gaso
    12·2 answers
  • Arthur is 10 years old. Tuition for one year at a public two-year college is $3,125. In 8 years, tuition is expected to increase
    7·2 answers
  • Debt Management Ratios Trina's Trikes, Inc. reported a debt-to-equity ratio of 1.83 times at the end of 2008. If the firm's tota
    14·1 answer
  • 5,000 units (100% complete as to material, 55% complete as to labor) with a cost of $124,800 materials and $104,500 conversion.
    15·1 answer
  • What does the word utilities in business mean?​
    14·2 answers
  • jameson has the following sources of income: sole proprietorship income $40,000 general partnership operating income $5,000 inte
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!