I think the taxes would decrease but increase for the company
Answer:
The answer is 30%
Explanation:
Solution
Given that:
Project A
Project A costs = $350
Cash flows =$250 and $250 (next 2 years)
Project B
Project B costs =$300
Cash flow = $300 and $100
Now what is the crossover rate for these projects.
Thus
Year Project A Project B A-B B-A
0 -350 -300 -50 50
1 250 300 -50 50
2 250 100 150 -150
IRR 27% 26% 30% 30%
So,
CF = CF1/(1+r)^1 + CF2/(1+r)^2
$-50 = $-50/(1+r)^1 + $150/(1+r)^2
r = 30%
CF = CF1/(1+r)^1 + CF2/(1+r)^2
$50 = $50/(1+r)^1 + $-150/(1+r)^2
r = 30%
Hence, the cross over rate for these project is 30%
Note:
IRR =Internal rate of return
CF =Cash flow
r = rate
Answer:
The correct option is C. which is <em>assess how long a company with positive cash flows from financing activities can continue to operate</em>
Explanation:
<em>The ratio of cash to monthly cash expenses can be used to make assessment of a company whether how long it can determine without additional financing and positive cash flows generated from operations.</em>
The formula of The ratio of cash to monthly cash expenses
= Cash s of year end ÷ Monthly Cash Expenses
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