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bearhunter [10]
3 years ago
8

Stratford Company purchased a machine with an estimated useful life of seven years. The machine will generate cash inflows of $9

0,000 each year over the next seven years. If the machine has no salvage value at the end of seven years, and assuming the company's discount rate is 10%, what is the purchase price of the machine if the net present value of the investment is $170,000
Business
1 answer:
Amiraneli [1.4K]3 years ago
4 0

Answer:

The price o the machine is = $268,157.69

Explanation:

<em>The Net present value is the difference between the present value (PV) cash inflows and the initial cost of the investment.</em>

<em>PV of cash inflow =</em>

90,000× (1- (1.1)^(-7) )/0.1

=  438,157.69

NPV = PV of cash inflow - cost of the machine

<em>Let represent cost of the machine as " y "</em>

170,000 =  438,157.69  - y

y = 438,157.69- 170,000

y =  268,157.69

The price o the machine is = $268,157.69

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A partial list of Waterways' accounts and their balances for the month of November 2016 follows:
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Answer:

Total current assets = $697,750

Explanation:

The partial balance sheet is as follows:

Waterways Corporation

Balance Sheet (Partial)

For the month of November 2016

<u>Details                                                                $                         $          </u>

<u>Current Assets</u>

Cash                                                           260,000

Accounts Receivable                                 275,000

Finished Goods Inventory, November       68,800

Raw Materials Inventory, November          52,700

Prepaid Expenses                                    <u>    41,250  </u>

Total current assets                                                              697,750

Note:

Cash is the most liquid of assets.

Accounts receivable which should be collected within 30 to 60 days are less liquid than cash, but more liquid than inventory.

Finished Goods Inventory which is expected to be sold and converted to cash within one year, and Raw Materials Inventory which is expected to be converted to finished good within one year are more liquid than Prepaid expense.

Therefore, the least liquid among current assets’ item above is the Prepaid Expense as it is cash paid for services not yet received..

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Based on your understanding of bond ratings and bond-rating criteria, which of the following statements is true?a. During an eco
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Answer:

Statements "A" is true.

Explanation:

During a financial recession and a cynical domain, the yield spread between government securities and corporate securities could be higher than during great monetary occasions. This is because the grounds that during a recession, corporate securities would convey more hazard, (for example, higher default chance) than during great monetary occasions. To make up for this extra hazard, financial specialists would request more returns.

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3 years ago
John Gardner is the city planner in a medium-sized southeastern city. The city is considering a proposal to award an exclusive c
borishaifa [10]

Answer:

<u>Monopoly</u>

P =      $20.00

Q = 10,000

<u>Socically Efficient:</u>

P = $16.80

Q = 14,000

The monopoly generates a deadthweight loss to maximize their gain.

In the socially efficient situation, there is no deadthweight loss threfore this makes the economy as a whole better.

Explanation:

Price = 28 - 0.0008Q

Marginal Cost  = 0.0012Q

Revenue: P x Q = (28 - 0.0008Q) x Q = 28Q - 0.0008Q²

Marginal Revenue:

R' = R(q) / dq = 28 -0.0016Q

We want to produce and sale until marginal revenue matches marginal cost:

28 -0.0016Q = 0.0012Q

28 = 0.0028Q

Q = 28 / 0.0028 = 10,000

P = 28 - 0.0008 (10,000) =

P = 28 - 8 = 20.00

The social efficiency will be that Price equals Marginal Cost.

28 - 0.008Q = 0.0012Q

28 = 0.0020Q

28 / 0.0020 = Q = 14,000

P = 28 - 0.0008(14,000) = 28 - 11.2 = 16,8

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