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wolverine [178]
3 years ago
6

Norman Co. wants to purchase a machine for $40,000, but needs to earn an 8% return. The expected year-end net cash flows are $12

,000 in each of the first three years, and $16,000 in the fourth year. What is the machine's net present value (round to the nearest whole dollar)?
Business
1 answer:
umka21 [38]3 years ago
7 0

Answer:

Year      Cashflow    [email protected]%           PV                    

                   $                                  $                                                                                                                    

0                (40,000)     1              (40,000)                                                                                                                                                                                                    

1                   12,000      0.9259      11,111      

2                  12,000      0.8573       10,288

3                  12,000      0.7938        9,526                                                                                                                                    

4                  16,000      0.7350        <u>11,760</u>

                                             NPV   <u> 2,685</u>

<u />

Explanation:

Net present value is the difference between present value of cash inflows and initial outlay. The present value of cash inflows were obtained by multiplying the cash inflows by discount factors.                                                                                                                                                                                                                                                            The discount factors were calculated  using the formula (1 + r)-n,  where n represents number of years and r denotes discount rate.                                      

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Letter B is correct. Unity of command.

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disposable income (billions of dollars per year) total consumption (billions of dollars per year) $ 0 $ 50 200 210(table 9.1) wh
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C = 50 + 0.8Y is the consumption function that is consistent with the provided data. The MPC is determined by subtracting the change in consumption from the change in disposable income, which equals 160/200, or 0.8.

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$200 billion less $0 billion equals $200 billion in changes to disposable income.

Consumption change equals $210 minus $50, or $160 billion.

MPC = Change in Consumption/Change in Disposable Income, which equals $160 billion/$200 billion and is equal to 0.8.

There is a 0.8 marginal tendency to consume.

Step 2

This is how consumption function is defined.

C = a + bY

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MPC is 0.8

So,

C = 50 + 0.8Y is the consumption function that matches the provided data.

To learn more about consumption function

brainly.com/question/14975005

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