Answer:
a-1. The present value of Plan 1 = $93.08
a-2. The deal 2 which involves paying immediately adn taking the 10% discount is better.
Explanation:
a-1.
The interest rate of 5% is taken as the discount rate to convert future cash flows into the present value.
The First payment plan with installments has a present value of,
Present Value-Plan 1 = 25 + 25/1.05 + 25/1.05² + 25/1.05³ = $93.08
a-2.
The first plan will cost $93.08 in the present value.
The second plan will involve immediate payment and a discount of 10%vwhch makes the present value of plan 2 as $90 (100 - (100*0.1)).
Thus, the second deal or deal involving immediate payment and taking the discount is better.
Answer:
True
Explanation:
Net Worth = Total Assets - Total Liabilities
When it is positive and the company wants that all financial ratios shall remain constant, that is no change then when there is increase in sales then there will be increase in profits.
Accordingly, in case of operating at full capacity the company shall also increase external financing. As with increase in sales debtors or cash will increase, but if the external finance is increased, net worth will remain same, but if it is not increased, net worth will increase.
Answer: is a seller that has the ability to control to some degree the price of the product it sells.
Explanation:
A price maker is a firm with the ability to influence the market price of its goods or services.
Features of a price makers
1. They are usually monopolies
2. They have a downward-sloping demand curve
3 The goods they produce do not have perfect substitutes,
The two pieces of information that are arguably the most important to any business are the following: Demand -- It is important to know what is currently on high-demand in the place your business is located for you to know what products or services should be made available. Culture - Can your business grow with the existing cultures of the place you are selling? Consider the place and culture for you to identify what products should be sold.
Answer:
The Net Present Value (NPV) of this project is <u>$93,405.59</u>.
Explanation:
Note: Find attached the excel file for the calculation of the NPV of this project.
Net present value (NPV) refers to the present value of cash inflows minus the present value of cash outflows over a specified period of time.
On its own, present value (PV) refers the value that a future sum of money or stream of cash flows has now or currently given a specified rate of return. The formula for calculating the PV is given as follows:
PV = FV / (1 + r)^n
Where,
FV = Future value
r = discount rate. This is given as 10% in this question
n = Relevant period, e.g. year
The above explanation and formula together with other stated formulae in the attached excel file is used in calculating the NPV of this project.
