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deff fn [24]
3 years ago
13

Falcon Crest Aces (FCA), Inc., is considering the purchase of a small plane to use in its wing-walking demonstrations and aerial

tour business. Various information about the proposed investment follows: Initial investment $ 170,000 Useful life $ 10 years Salvage value 20,000 Annual net income generated $ 4,000 FCA's cost of capital 8% Assume straight line depreciation method is used. Net present value (NPV). (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar.)
NPV:

Recalculate FCA's NPV assuming the cost of capital is 3% percent. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your final answer to the nearest whole dollar amount.)

NPV:
Business
1 answer:
Simora [160]3 years ago
7 0

Answer:

Net present value at 8%=($42510)

Explanation:

Explanation- Net present value   = Present value of cash inflows – Total outflows

={(19000*6.7100) - $170000}

=$127490- $170000

= ($42510)

Annual net cash inflows = Net income+ Depreciation

= $4000+$15000

= $19000

Straight line Method:-

= Cost of asset- Salvage value of asset/No. of useful life (years)

=($170000-$20000)/10 years

=$150000/10 years = $15000

Net present value at 3%=($7926)

Explanation- Net present value   = Present value of cash inflows – Total outflows

={(19000*8.5302) - $170000}

=$162074- $170000

= ($7926)

Annual net cash inflows = Net income+ Depreciation

= $4000+$15000

= $19000

Straight line Method:-

= Cost of asset- Salvage value of asset/No. of useful life (years)

=($170000-$20000)/10 years

=$150000/10 years = $15000

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r-ruslan [8.4K]

Answer: 26.73%

Explanation:

You can calculate the expected return using the Capital Asset Pricing Model (CAPM).

Formula is:

Expected return = Risk free rate + beta * (Market return - risk free rate)

Use the previous figures to solve for the risk free rate:

20.47% = Rf + 1.39 * (16.50% - Rf)

20.47% = Rf + 22.935% - 1.39R

20.47% - 22.935% = Rf - 1.39Rf

-2.465% = -0.39Rf

Rf = -2.465% / -0.39

= 6.32%

New expected return is:

= 6.32% + 1.39 * (21% - 6.32%)

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7 0
3 years ago
If the price elasticity of supply is 0.5 and the quantity supplied decreases by 6%, then the price must have decreased by 3%. a.
PolarNik [594]

Answer: False

Explanation:

The price elasticity of supply measures the change in quantity supplied when the price changes.

The basic trend is that when price increases, quantity supplied increases as well. The reverse is true.

Price elasticity of supply = %Change in quantity supplied / % change in price

0.5 = -6% / Change in price

0.5 * Change in price = -6%

Change in price = -6% / 0.5

= -12%

The statement above is therefore false because price should have reduced by 12% for quantity supplied to reduce by 6%

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Suppose that a lumberyard has a supply of 10-ft boards, which are cut into 3-ft, 4-ft, and 5-ft boards according to customer dem
Alja [10]

Answer :

Some answers are attached below

Explanation:

a) Based on the information provided, below are the all possible sensible patterns the lumberyard may use to cut the 10-ft boards -

Pattern Number 3-ft boards 4-ft boards 5-ft boards Waste (<3-ft)

1                      3                   0                     0                       1                                                                        

2                                2                 1                          0                      0

3                             1                    0                           1                       2            

4                                 0                     1                          1                        1

5                           0                      2                           0                       2                  

6                      0                     0                            2                     0      

b) ILP Formulation

Objective Function

Minimize Number of 10 ft-boards to be cut

Z = x1+x2+x3+x4+x5+x6 where xi is the number of boards for pattern i

subject to constraints -

3x1+2x2+x3>=90 ----> 3-ft boards

x2+x4+2x5>=60 ----->4-ft boards

x3+x4+2x6>=60 ----->5-ft boards

Xi>=0 ---->Non-negativity constraint

Below is the excel solver formulation and solution -

The optimal number of Pattern 1,5,6 =0, Pattern 2,3 and 4 = 30

The minimum number of 10 ft-boards to be cut = 90

7 0
3 years ago
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