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Nadya [2.5K]
3 years ago
15

You are considering two independent projects that have differing requirements. Project A has a required return of 12 percent com

pared to Project B’s required return of 13.5 percent. Project A costs $75,000 and has cash flows of $21,000, $49,000, and $12,000 for Years 1 to 3, respectively. Project B has an initial cost of $70,000 and cash flows of $15,000, $18,000, and $41,000 for Years 1 to 3, respectively. Given this information, you should:
1. accept both Project A and Project B.
2. accept Project A and reject Project B.
3. accept Project B and reject Project A.
4. reject both Project A and Project B.
5. accept whichever one you want but not both.
Business
1 answer:
finlep [7]3 years ago
4 0

Answer:

4. reject both Project A and Project B.

their NPV are negative so are not profitable.

Explanation:

We have to calculate the present value of the projects at their return rate

<u>Project A</u>

Present value of the cash flow - investment = net present value

\frac{21,000}{(1.12)^{1} } = PV

\frac{49,000}{(1.12)^{2} } = PV

\frac{12,000}{(1.12)^{3} } = PV

-75,000 + PV 21,000 + PV 49,000 + PV 12,000

-75,000 + 18,750 + 39062.5 + 8,541.36 = -8646.14

<u>Project B</u>

Present value of the cash flow - investment = net present value

-70,000 + PV 15,000 + PV 18,000 + PV 41,000

\frac{15,000}{(1.135)^{1} } = PV

\frac{18,000}{(1.135)^{2} } = PV

\frac{41,000}{(1.135)^{3} } = PV

-70,000 + 13215.86 + 13972.71 + 28041.18 = -14770.25

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Answer:

The amount of net exports of goods and services is -$1 million.

Explanation:

The gross domestic product (GDP) is equal to the total value of the products and services that are produced in a country in a specific period of time. In this case, we will have that GDP would be:

GDP= I+G+NX

I= investment

G= government expenditure

NX= net exports

Then, we replace the formula and isolate NX:

$12=$5.5+$7.5+NX

NX= $12-$5.5-$7.5

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3 years ago
Latasha is training for a triathlon, a timed race that combines swimming, biking, and running. Consider the following sentence:
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The principle that Latasha caters for that her husband does not is that <u>d. Many </u><u>decisions </u><u>are taken using </u><u>marginal thinking. </u>

<h3>Marginal decision making</h3>
  • Involves making decisions based on the marginal costs and benefits.
  • A person will make a decision that has more benefits than costs.

By swimming more, Latasha would make get the benefit of being better at something she is already good at. If all she does is swimming however, she would incur costs of losing out in the other activities which would surpass the benefits of being good in swimming alone.

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3 0
2 years ago
Name any four roles (functions) of money
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Explanation:

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3 years ago
TRANSACTIONS1. John Amos started the business with a cash investment of $60,000.2. Purchased equipment for $22,000 on credit.3.
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Answer:

Cash  44,250      

Receivables  $1,850      

Equipment $26,600        

Accounts payable 9,000    

Capital 60,000    

Revenue 8,150  

Expenses 4,450

Explanation:

The question is to determine the recording of the transactions above on the Accounting equation

The accounting equation says Assets = Liabilities + Owners' Equity

In this context assets = Cash, Receivables and Equipment

Liabilities = Payables

Owners' Equity = Capital + Revenue - Expenses

The Accounting Equation

ASSETS                                            = LIABILITIES       +     OWNERS EQUITY

 Cash      + Receivables + Equip.           payable   + Capital + Rev -  Expens

1. $60,000                                                                      60,000

2.                                            $22,000     $22,000

3. $3,100                                                                                        3,100

4. -4,600                                    4,600

5                      $5,050                                                                  5,050

6. -4,450                                                                                                    4,450

7. 3,200           -3,200

8. -13,000                                                    -13,000

<u>     44,250        $1,850        $26,600         9,000    60,000     8,150   4,450</u>                  

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Many successful proposal writers talk to decision-makers before delivering an official plan, which lets them decide their desires and aspirations and, in effect, helps them arrange the proposal to best satisfy decision-makers.

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