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
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

You might be interested in
Jones Corp. reported current assets of $191,000 and current liabilities of $136,000 on its most recent balance sheet. The curren
stiks02 [169]

Answer:

acid-test ratio 1,4044

Explanation:

We are asked for a variation ofthe current ratio

whie current ratio is determinate like:

\frac{current\: assets }{current\: liab}

the acid-test will remove inventory from the current assets, leaving only cash, marketable securities and accounts receivables considered for the calculations:

191,000 current assets - 85,000 inventory = 106,000

136,000 current liabilities

191,600 / 136,000  = 1,4044

7 0
3 years ago
A remotely located air sampling station can be powered by solar cells or by running an above ground electric line to the site an
Olin [163]

Answer:

a) should install the solar cells

alternative 1, solar cells

initial investment $18,000

annual expenses $2,400 (5 years)

NPV =  $27,097.89

AW = (10% x $27,097.89) / [1 - (1 + 10%)⁻⁵] = $7,148.36

alternative 2, power line

initial investment $27,500

annual expenses $1,000 (5 years)

NPV =  $31,290.79

AW = (10% x $31,290.79) / [1 - (1 + 10%)⁻⁵] = $8,254.43

b) $23,307.10

3 0
3 years ago
Gene is looking for a loan so that he can buy a car. There are a few different banks where he can apply for a loan. What should
ElenaW [278]

Answer:

The Answer To This Question is B. a good credit score.

Explanation:

8 0
2 years ago
21. which of the following sections is responsible for providing communication planning and resources?
Reil [10]
Wher do we choose the communication planning and resource?
8 0
3 years ago
The purpose of the ______________________ is to address financial uncertainty and provide the nation with a more stable economy.
katen-ka-za [31]

Answer:

The Federal Reserve System

Explanation:

The Federal Reserve System represents the United State's Central bank. It is also called either the Fed or the Federal Reserve.

Created by the U.S. congress, the Fed is in charge of the affairs of the financial system of the United States. Specifically, it was created to ensure that the financial system is flexible, safe and <u>monetarily stable</u>.

The Fed regulates banking activities, maintains the stability of the financial system and is also in charge of the monetary policies adopted in the United States.

8 0
3 years ago
Other questions:
  • What is a stock market
    5·2 answers
  • Billy is interested in lowering the speed limit on a major road near his house. A citizens’ group has formed to lobby the city c
    8·1 answer
  • The balance in the prepaid rent account before adjustment at the end of the year is $21,000, which represents three months’ rent
    10·1 answer
  • Changes in nominal GDP over time ... Select one: a. ... reflect changes in the quantity of goods and services produced, their pr
    5·1 answer
  • Economists sometimes give conflicting advice because
    9·1 answer
  • In order to comply with DAVID Memorandum of Understanding requirements, a user must acknowledge understanding of:
    8·1 answer
  • Randy agreed to join a biology study group. When the study group leader gave him her phone number, he had nothing on which to re
    10·1 answer
  • Construction managers can be salaried employees or work for___________.
    13·1 answer
  • Association Rule Analysis is the statistical technique typically used to conduct market basket analysis.
    5·1 answer
  • Brian explains that blogging is a type of inbound marketing. Which type of blog typically provides the highest level of digital
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!