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qaws [65]
3 years ago
11

Coyne Corporation is evaluating a capital investment opportunity. This project would require an initial investment of $ 39 comma

000 to purchase equipment. The equipment will have a residual value at the end of its life of $ 2 comma 000. The useful life of the equipment is 6 years. The new project is expected to generate additional net cash inflows of $ 20 comma 000 per year for each of the six years.​ Coyne's required rate of return is 10​%. The net present value of this project is closest​ to:
Business
1 answer:
Genrish500 [490]3 years ago
6 0

Answer:

NPV = $49,234.16

Explanation:

The Net present value (NPV) is the difference between the Present value (PV) of cash inflows and the PV of cash outflows. A positive NPV implies a good investment  project and a negative figure implies the opposite.  

NPV of an investment:  

NPV = PV of Cash inflows - PV of cash outflow  

<em>Present value of cash inflows:</em>

A × 1-(1+r)^(-n)/r

A- annual cash inflow-20,000   r-rate of return-10%, n-number of years-6

PV of cash flow = 20,000 × (1.1)^(-6)/0.1 = 87,105.21399

<em>PV of scrap value</em>

F×  (1+r)^(-n)

F- scrap value

= 2,000× 1.1^(-6)= 1,128.94

Initial cost = $39,000

NPV = 87,105.21399 + 1,128.94 -39,000=   $49,234.16  

NPV = $49,234.16

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volume_upclosed_captiondescriptionfullscreen According to Mikey, the founder of Holden Outerwear, manufacturing products at five
Ad libitum [116K]

Answer: a. increased paperwork at every step of the shipping process.

Explanation:

There is no excerpt attached but this should be the answer.

Having five different factories in China means that Holden Outwear would have to transport things to and fro all five factories including raw materials, intermediate goods and finished goods.

This represents a lot of shipping and shipping comes with paperwork. It would therefore be no surprise if the Holden Outwear is having to go through the bane of increased paperwork for manufacturing at five different factories.

6 0
3 years ago
On October 1, 2015, Zircon Jewelry Company accepted a 4-month, 10% note for $2,400 in settlement of an overdue account receivabl
Whitepunk [10]

Answer:

Explanation:

The journal entry is shown below:

Cash A/c Dr $2,480

         To Interest receivable $60

         To Interest revenue $20

         To Note receivable $2,400

(Being the collection of funds is recorded)

The computation of interest receivable is shown below:

= Principal × rate of interest × number of months ÷ (total number of months in a year)  

= $2,400 × 10% × (3 months ÷ 12 months)

= $60

And for interest revenue would be

= Principal × rate of interest × number of months ÷ (total number of months in a year)  

= $2,400 × 10% × (1 months ÷ 12 months)

= $20

7 0
3 years ago
The operating revenues of the three largest business segments for Time Warner, Inc., for a recent year follow. Each segment incl
Kisachek [45]

Answer:

Time Warner, Inc.

a.

                                     Turner      Home Box Office  Warner Bros.   Total

Segment Revenues

(in millions)                  $21,700            $22,200         $80,600      $124,500

Variable costs                 4,774                10,434           25,792           41,000

Contribution margin  $16,926               $11,766        $54,808        $83,500

Contribution ratio     78% (100 - 22)    53% (100 -47) 68% (100 -32)   67%

b. Certainly, Turnover and Warner Bros. are more profitable businesses than Home Box Office in terms of total contribution margin (dollars) and contribution margin ratio.

Explanation:

a) Data and Calculations:

Segment Revenues

(in millions)

Turner (cable networks and digital media) $21,700

Home Box Office (pay television) 22,200

Warner Bros. (films, television, and videos) 80,600

Assume that the variable costs as a percent of sales for each segment are as follows:

Turner 22%

Home Box Office 47%

Warner Bros. 32%

b) The contribution margin ratio for the three segments can easily be determined by subtracting the variable costs percentages from 100 for each segment instead of doing more computations (Contribution margin/Sales Revenue * 100).  But the results are the same for either method.

6 0
2 years ago
Does this​ "stiff competition" mean that the demand curve for​ McDonald's Chicken McNuggets is​ horizontal? Briefly explain.
blagie [28]

Answer: I found the complete question on Google:

By 2017, McDonald's had stopped selling Chicken McNuggets and other products made from chickens fed antibiotics. The change increased McDonald's costs, but an article in the Wall Street Journal noted that "...McDonald's ability to raise its prices is limited because of stiff competition."Source: David Kesmodel, Jacob Bunge, and Annie Gasparro, "McDonald's to Curb Antibiotics in Chicken," Wall Street Journal, March 4, 2015. Does this "stiff competition" mean that the demand curve for McDonald's Chicken McNuggets is horizontal? Briefly explain.

And the correct answer is: "B. ​No, the demand curve is not horizontal because Chicken McNuggets are not identical to other chicken products.".

8 0
3 years ago
TJ's and Corner Grocery are all-equity firms. TJ's has 2,500 shares outstanding at a market price of $16.70 a share. Corner Groc
alexandr402 [8]

Answer:

$1.30

Explanation:

The valuation of TJ's = price per share * number of shares in issue

= $16.70 * 2,500 shares = $41,750.

Corner Grocery offer for TJ's of $45,000, and obviously a premium over the market value of TJ's at $41,750.

The price per share of Corner Grocery's offer = \frac{45,000}{2,500} = $18 per share.

That is, offer value divided by the number of shares to be acquired.

Therefore, merger premium per share = offer price, less market price

= $18 - $16.70.

= $1.30

8 0
3 years ago
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