C. They should take advice from experts if they lack knowledge about certain aspects of their business.
Answer:
The Net Present Value of the project is A) -$23,730.21. Since the project is not increasing the wealth of shareholders, and the NPV is negative so we should reject the Project.
Explanation:
If the company invest in the project, its shareholders' wealth will be reduced by $23,730.21. No management would do so because its objective is to increase Shareholders' wealth and not to reduce it.
I have attached an Excel File. Go through it. It will help you to understand the calculations.
Thanks!
Answer:
a. $32,300
b. $32,900
Explanation:
The computation of given question is shown below:
a. Cash basis net income is
= Collection from customers - Paid expenses
= $104,000 - $71,700
= $32,300
b. Accrual-basis net income
= Service Performed - Incurred Expenses
where,
Service performed is
= $104,000 - $25,500 + $38,600
= $117,100
And, the expenses incurred is
= $71,700 - $30,400 + $42,900
= $84,200
So, the net income under accrual basis is
= $117,100 - $84,200
= $32,900
