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kogti [31]
3 years ago
5

Consider a $10,000 machine that will reduce pretax operating costs by $3,000 per year over a 5-year period. Assume no changes in

net working capital and a zero scrap value after five years. For simplicity, assume straight-line depreciation to zero, a marginal tax rate of 34 percent, and a required return of 10 percent. The net present value of acquiring this machine is:A) $83.B) $449.C) $689.D) $827.E) $1,235.
Business
1 answer:
ki77a [65]3 years ago
8 0

Answer:

A) $83

Explanation:

First, find aftertax OCF per year

aftertax OCF = (Operating benefit - depreciation)*(1-tax) +depreciation

Depreciation per year = 10,000/5 = 2,000

Tax = 34%

aftertax OCF per year = (3,000 - 2,000)*(1-0.34) + 2,000

= 660 +2,000

= 2,660

Next, find the PV of the aftertax OCF per year. It is an annuity;

PMT = 2,660

N = 5

I/Y = 10%

FV = 0

then CPT PV = 10,083.493

Subtract the initial cost of the machine to find the Net Present Value (NPV);

NPV = -$10,000 + $10,083.493

NPV = $83.493

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saveliy_v [14]

Answer:

Personal

Explanation:

Personal related currencies refers to the currencies that deals with the insipitration and the morality, vision, strength. It basically shows the needs of the person nd the value that actually what person could do

Since in the question it is mentioned that the if the tasks are shared that rise the skills and ablities of the person than this would represent the personal related currencies and hence the same is to be considered

3 0
3 years ago
What is a disadvantage of government bonds?
hjlf
None of those answers are suitable to me.

Government bonds are generally regarded as low-risk and they typically have modest (low) interest rates for return on investment, and these are advantages really. So we can discount answer A, C, and D.

I guess you could say that bonds can be hard to find (Answer B) but this not really true. There is always a bond market to trade bonds on. It requires setting up a trading account or speaking to a broker so this can be more difficult than putting money in a bank account, but to be honest I don't think any of those answers are appropriate for the question.
3 0
3 years ago
Read 2 more answers
How does cvs define the value, “innovation”?
Lina20 [59]
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7 0
3 years ago
Ginny and Eric are partners at an architecture firm. They are trying to determine which of them has a comparative advantage in b
blondinia [14]

Answer: (i) $20 per model

(ii) $27 per model

(iii) Ginny has a comparative advantage in building models.

Explanation:

A country or a firm has a comparative advantage in producing a commodity if the opportunity cost of producing that commodity in terms of other commodities is lower than the other country or firm.

Opportunity cost is the benefit that is foregone for an individual by choosing one alternative over other alternatives available to him.

If the opportunity cost is lower for an individual then this will benefit him whereas if the opportunity cost is higher then this will not benefit the individuals.

Therefore,

Ginny's Opportunity cost of producing one model = \frac{400}{20}

                                                                                      = $20 per model

Eric’s opportunity cost of building models = $20 + 35% of $20

                                                                      = $20 + $7

                                                                      = $27 per model

Hence, Ginny has a comparative advantage in building models because Ginny's opportunity cost of building model is lower than Eric's opportunity cost.

5 0
3 years ago
The typical consumer's food basket in the base year 2015 is as follows: 30 chickens at $4 each 10 hams at $5 each 10 steaks at $
jarptica [38.1K]

Answer:

A) change in the cost of eating index = <u>20% increase</u>

B) Suppose that consumers are completely indifferent between two chickens and one ham. For this example, how large is the substitution bias in the official "cost-of-eating" index?

The <u>INCREASE</u> in the cost-of-eating index is <u>18</u> %.

The <u>OVERESTIMATE</u> of inflation in the cost of eating reflects substitution bias.

Explanation:

2015

product               units              unit cost               total

chickens              30                      $4                   $120

hams                    10                      $5                     $50

<u>steaks                  10                      $8                     $80</u>

total                                                                       $250

2016

product               units              unit cost               total

chickens              30                      $5                   $150

hams                    10                      $7                     $70

<u>steaks                  10                      $8                     $80</u>

total                                                                       $300

A) ($300 - $250) / $250 = 20%

B)

if consumers are indifferent for 2 chickens per 1 ham, then the new basket should be assuming consumers will purchase the cheapest option:

2016

product               units              unit cost               total

hams                    25                      $7                   $175

<u>steaks                  10                      $8                     $80</u>

total                                                                       $255

the increase in inflation would have been = ($255 - $250) / $250 = 2%

the substitution bias = reported inflation - real inflation = 20% - 2% = 18%

8 0
3 years ago
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