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
larisa [96]
2 years ago
13

Consider a one-year project that costs $126,000, provides an income of $70,000 a year for 5 years, and costs $225,000 to dispose

of at the very end of the fifth year. Assume that the first payment comes at the start of the year after the project is undertaken. Should the project be undertaken at a 0% discount rate? How about 2%? 5%? 10%? (HINT: To answers these questions use the present discounted value)
Business
1 answer:
Inessa [10]2 years ago
4 0

Answer:

Present Value (PV) of cash flows are as follows.

(i) Discount rate = 0%

\mathrm{PV}(\mathrm{S})=-126,000+70,000 \mathrm{x} \mathrm{P} / \mathrm{A}(0 \%, 5)-225,000 \mathrm{x} \mathrm{P} / \mathrm{F}(0 \%, 5)=-126,000+70,000 \times 5-225,000

= - 1

Since PV < 0, the project should not be undertaken.

(ii) Discount rate = 2%

\mathrm{PV}(\mathrm{S})=-126,000+70,000 \mathrm{x} \mathrm{P} / \mathrm{A}(2 \%, 5)-225,000 \mathrm{x} \mathrm{P} / \mathrm{F}(2 \%, 5)

|=-126,000+70,000 \times 4.7135-225,000 \times 0.9057

= 156

Since PV > 0, the project should be undertaken.

(iii) Discount rate = 5%

\mathrm{PV}(\mathrm{S})=-126,000+70,000 \mathrm{x} \mathrm{P} / \mathrm{A}(5 \%, 5)-225,000 \mathrm{x} \mathrm{P} / \mathrm{F}(5 \%, 5)

=-126,000+70,000 \times 4.3295-225,000 \times 0.7835

= 772

Since PV > 0, the project should be undertaken.

(ii) Discount rate = 10%

\mathrm{PV}(\mathrm{S})=-126,000+70,000 \mathrm{x} \mathrm{P} / \mathrm{A}(10 \%, 5)-225,000 \mathrm{x} \mathrm{P} / \mathrm{F}(10 \%, 5)

=-126,000+70,000 \times 3.7908-225,000 \times 0.6209=-126,000+265,356-139,707

= - 351

Since PV < 0, the project should not be undertaken.

You might be interested in
PLS HELP!!!
expeople1 [14]
False I believe , you shouldn’t have negativity thrown at you just because of your occupation
8 0
2 years ago
Can you solve this activty for me please got stuck,
Katyanochek1 [597]

Answer:

a. The marginal product of each white worker is 143%

b. The marginal product of each black worker is 70%

c. Since, adjusted wage of black labor with d=0.2 is less than the wage of white labor of $2,000, the profit maximizing firm would hire only black labor.

Since, adjusted wage of black labor with d=0.8 is greater than the wage of white labor of $2,000, the profit maximizing firm would hire only white labor.

d. Value of D coefficient that allows to employ black and white labor is 0.43

Explanation:

According to the given data we have the following:

Weekly wage for white labor is $2,000

Weekly wage for black labor is $1,400

production function is Q = 10(EW + EB)

manager production function is Q = 10EW + 10(1 – d) EB

Price of the product is $240

Weekly output is 150 units

a. To calculate the value of the marginal product of each white worker we use the following formula:

marginal product of each white worker=Weekly wage for white labor/Weekly wage for black labor

marginal product of each white worker=$2,000/$1,400

marginal product of each white worker=1.43=143%

b. To calculate the value of the marginal product of each black worker we use the following formula:

marginal product of each black worker=Weekly wage for black labor/Weekly wage for white labor

marginal product of each black worker=$1,400/$2,000

marginal product of each black worker=0.7=70%

c. To describe the employment decision we have to calculate the adjusted wage of black labor with d=0.2 and d=0.8 as follows:

adjusted wage of black labor with d=0.2=Wage black(1+D coefficient)

=1,400(1+0.2)

=1400(1.2)

=1,680.

Since, adjusted wage of black labor with d=0.2 is less than the wage of white labor of $2,000, the profit maximizing firm would hire only black labor.

adjusted wage of black labor with d=0.2=Wage black(1+D coefficient)

=1,400(1+0.8)

=1,400(1.8)

=2,520

Since, adjusted wage of black labor with d=0.8 is greater than the wage of white labor of $2,000, the profit maximizing firm would hire only white labor.

d. To calculate for what value(s) of d is a firm willing to hire blacks and whites we would have to calculate the following formula:

Wage black(1+D coefficient)=Wage white

1,400(1+D coefficient)=2,000

(1+D coefficient)=2,000/1,4000

D coefficient=1.43-1

D coefficient=0.43

Value of D coefficient that allows to employ black and white labor is 0.43

4 0
3 years ago
Exercise 20-19 Budgeted cash payments LO P2 Zisk Co. purchases raw materials on account. Budgeted purchase amounts are: April, $
beks73 [17]

Answer:

See explanation section.

Explanation:

                                                    P2 Zisk Co.

                                      Budgeted cash payments

                                            For the 2nd quarter

                                                            April                   May                  June

Accounts payable                           $22,000

70% in the month of purchase       $56,000           $77,000            $84,000

30% in the month after purchase                            $24,000            $33,000

Budgeted cash payments              $78,000            $101,000           $117,000

Total budgeted cash for the 2nd quarter = $296,000.

30% in the month after purchase means 30% amount will be given in the following month.

8 0
3 years ago
Smarter employees are more likely to want to remain members of the organization.
cluponka [151]
Smarter employees are more likely to want to remain members of the organization. False.
Employee advocacy program, you have two sets of objectives: Goals for your overall program, as well as goals for your individual stakeholders. In our experience, it's the latter that often gets overlooked.
3 0
2 years ago
If the financial markets are highly efficient, then:
asambeis [7]
Choice (b) is correct. Market efficiency entails unpredictable stock prices in the market. Since there is a higher risk of investment losses in an unpredictable stock prices change, the best investment strategy is to diversify portfolio so as to minimize loss on the other stock while maximizing gain from another.
3 0
3 years ago
Read 2 more answers
Other questions:
  • When looking for capital, bankers and other lenders will usually feel most comfortable investing in a/an
    7·1 answer
  • The date of Internet materials is increasingly significant when researching topics experiencing rapid change due to these factor
    11·2 answers
  • Match the job descriptions with the job titles.
    5·1 answer
  • Suppose that General Motors Acceptance Corporation issued a bond with 10 years until​ maturity, a face value of $ 1 comma 000​,
    8·1 answer
  • Reasons for the formation of partnership
    7·1 answer
  • Suppose that a rap grouprap group called RG 2RG2 has released its first CD with LiveLive Records at an intended list price of​ $
    12·1 answer
  • The following information describes a​ company's usage of direct labor in a recent​ period: Actual direct labor hours used 40 co
    10·1 answer
  • At which rate is total utility increasing: a constant rate, a decreasing rate, or an increasing rate
    15·1 answer
  • Match each term with the correct definition.
    9·1 answer
  • True or false: a manager's self-appraisal is the most accurate source of information regarding leadership strengths and weakness
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!