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Alona [7]
3 years ago
15

You are given two choices of​ investments, Investment A and Investment B. Both investments have the same future cash flows. Inve

stment A has a discount rate of​ 4%, and Investment B has a discount rate of​ 5%. Which of the following is​ true?
A. The present value of cash flows in Investment A is lower than the present value of cash flows in Investment B.
B. The present value of cash flows in Investment A is higher than the present value of cash flows in Investment B.
C. The present value of cash flows in Investment A is equal to the present value of cash flows in Investment B.
D. No comparison can be madelong dash—we need to know the cash flows to calculate the present value.
Business
1 answer:
scoundrel [369]3 years ago
6 0

Answer:

The answer is: B) The present value of cash flows in Investment A is higher than the present value of cash flows in Investment B.

Explanation:

The present value of a cash flow is the current value of a future amount of money discounted by an specific rate of return.

Both investments will have the same cash flows, but investment B has a higher discount rate than investment A. The cash flows of investment A will have a higher present value than the cash flows of investment B.

For example, both investments A and B have a future cash flow of $100, but investment A has a discount rate of 4% while investment B has a discount rate of 5%.

The present value of the cash flow for investment A is $96.15 (= $100 / 1.04)

The present value of the cash flow for investment B is $95.24 (= $100 / 1.05)

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Acme Manufacturing makes their preliminary economic studies using a​ before-tax MARR of 17​%.More detailed studies are performed
VMariaS [17]

Answer:

The after-tax MARR is 13.26%

Explanation:

After - tax MARR = Before tax MARR*(1 - tax rate)

                            = 17%*(1 - 22%)

                            = 13.26%

Therefore, The after-tax MARR is 13.26%

7 0
4 years ago
The balance sheet of California Clothing reports total equity of $600,000 and $700,000 at the beginning and end of the year, res
kolbaska11 [484]

Answer:

10%

Explanation:

return on equity = net income / average equity = $65,000 / [($600,000 + $700,000) / 2] = $65,000 / $650,000 = 0.1 = 10%

Return on equity (ROE) measures the profitability of a company by comparing the net income generated in the year against the company's equity. The higher the ROE, the more profitable the company is. In this case, each dollar invested generates $0.10 in profit.

5 0
3 years ago
Southwest U's campus book store sells course packs for $14 each. The variable cost per pack is $12, and at current annual sales
Mumz [18]

Answer:

$23,000

Explanation:

current annual sales = 49,000 packs

Selling price of course packs = $14 each

variable cost per pack = $12

Earnings = $75,000

Contribution:

= current annual sales × (Selling price of course packs - variable cost per pack)

= 49,000 packs × ($14 - $12)

= 49,000 packs × $2

= $98,000

Fixed costs of producing the course packs:

= Contribution - Earnings

= $98,000 - $75,000

= $23,000

4 0
3 years ago
Assume that Delaware Ice Cream Company uses the FIFO method to calculate equivalent units. It has unit costs of $10 for material
romanna [79]

Answer: $55,000

Explanation:

Material costs are $10 per unit and have been completed in regards to the 2,500 units.

Material cost = 10 * 2,500

= $25,000

Conversion costs are $30 per unit and have only been 40% completed.

= (40% * 2,500) * 30

= 1,000 * 30

= $30,000

Ending Work in Progress Inventory Cost =  Material Cost + Conversion Cost

= 25,000 + 30,000

= $55,000

4 0
3 years ago
Orb, Inc., does business online around the globe. The United Nations Convention on the Use of Electronic Communications in Inter
likoan [24]

Answer:

D. all of the choices

Explanation:

The UNC on the Use of Electronic Communications in International Contracts and other International agreements improve global commercial certainty by determining an Internet user´s location for legal purposes, by providing for the recognition of judgments by other nations´ courts and also by providing that e-signatures are the equivalent of signatures on paper.

6 0
3 years ago
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