Within the relevant range of activity, costs:

What must be the first cost of Alternative B to make the two alternatives equally attractive economically at an interest rate of

Gelneren [198K]

Answer:

The answer is "21,622.98".

Explanation:

In the given question some information is missing, which can be defined in the given attachment.

To calculate the first cost we first subtract B cost is to X.

NPV = Cash Flow of the sum of PV amount

$PV = \frac{Flow of cash} {(1+i)^n} \\\\ \ Calculating \ the \ NPV \ of \ option \ A: \\\\$

$= \frac{-16600}{(1 + 0.08)^0}-\frac{2400}{(1 + 0.08)^1}-\frac{2400}{(1 + 0.08)^2} -\frac{2400}{(1 + 0.08)^3}-\frac{2400}{(1 + 0.08)^4}$

$= \frac{-16600}{1}-\frac{2400}{1.08}-\frac{2400}{1.16}-\frac{2400}{1.25}-\frac{2400}{1.36}$

$=-16600-2222.22-2068.96-1920-1764.70\\\\=-24,575.88$

The value of Option A or NPV = -24,575.88

The value of Option B or NPV:

$=-\frac{X}{(1 + 0.80)^0}-\frac{1000}{(1 + 0.08)^1} -\frac{1000}{(1 + 0.08)^2}-\frac{1000}{(1 + 0.08)^3}-\frac{1000}{(1 + 0.08)^4} \\\\ =-\frac{X}{(1.80)^0}-\frac{1000}{(1.08)^1} -\frac{1000}{(1.08)^2}-\frac{1000}{(1.08)^3}-\frac{1000}{(1.08)^4}$

$= -\frac{X}{1}-\frac{1000}{1.08}-\frac{1000}{1.16}-\frac{1000}{1.25}-\frac{1000}{1.36}\\\\= -X -555.55-862.06-800-735.29\\\\=-X -2952.9$

The value of Option B or NPV = -X -2952.9

As demanded

In Option B the value of NPV = In Option A the value of NPV

$-X -2952.9= -24,575.88\\\\-X= -21,622.98\\\\X=21,622.98\\$

7 0

4 years ago

On January 1, Year 1, the Mahoney Company borrowed $164,000 cash from Sun Bank by issuing a five-year 8% term note. The principa

Georgia [21]

Answer:

Principal payment = $27,505.00

Explanation:

Loan Amortization: A loan repayment method structured such that a series of equal periodic installments will be paid for certain number of periods to offset both the loan principal amount and the accrued interest.

The principal repayment in year 1 = Annual payment - Interest payment in year 1

Interest payment in year = Interest rate × Principal Amount

=8% × 164,000

= $13,120.00

Principal payment = $40,635 - 13,120 = $27,505.00

Principal payment = $27,505.00

8 0

4 years ago

A convertible debenture can never sell for more than its conversion value or less than its bond value.

erik [133]

Answer:

b. False

Explanation:

A convertible debenture can sell for more than its conversion value or less than its bond value.

6 0

3 years ago

In a business combination in which an acquiring company purchases 100% of the outstanding common stock of another company, if th

spin [16.1K]

Answer:

It will be reported as gain.

Explanation:

If the fair value of the net identifiable assets acquired exceeds the fair value of the consideration given (purchase cost) will be a negative goodwill.

It will be due to "bargain purchase" and the accounting records the "negative goodwill" as a gain in the income statment

4 0

3 years ago

Using the midpoint method, calculate the price elasticity of demand for Good Z using the following information:

bagirrra123 [75]

Answer:elasticity using mid point formular : Q2 - Q1/(Q2+Q1) /2 X 100

P2-P1/ (P2+P1) /2 x100

60- 85 ÷(60+85) ÷ 2 x100 = -20.69

15-10 ÷ (15+10)÷ 2 x 100 = 40

Elasticity = -20.69/ 40

= -0.52

Explanation:

4 0

3 years ago