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meriva
3 years ago
8

Joe's Hardware is adding a new product line that will require an investment of $ 1,512,000. Managers estimate that this investme

nt will have a​ 10-year life and generate net cash inflows of $ 310,000 the first​ year, $ 270,000 the second​ year, and $ 230,000 each year thereafter for eight years. Compute the payback period. Round to one decimal place.

Business
1 answer:
Sati [7]3 years ago
7 0

Answer:

6.05 years

Explanation:

Payback period is the time in which a project returns back the initial investment in the form of net cash flow. For this purpose we use the net cash flows to calculate the payback.

Payback working is attached with this answer please find it.

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A stock has an expected return of 11 percent, its beta is 1.20, and the risk-free rate is 4.4 percent. What must the expected re
Drupady [299]

Answer:

Expected market return = 9.8%

Explanation:

The expected return on the market can be worked out using the Capital Asset Pricing Model.

<em>The capital asset pricing model is a risk-based model. Here, the return on equity is dependent on the level of reaction of the the equity to changes in the return on a market portfolio. These changes are captured as systematic risk. The magnitude by which a stock is affected by systematic risk is measured by beta. </em>

Under CAPM, Ke= Rf + β(Rm-Rf)

Rf-risk-free rate (treasury bill rate)- 4.4%

β= Beta - 1.20

Rm= Return on market.- ?

Applying this model, we have

11%= 4.4%+ (R-4.4%)×1.20

0.11-0.044= 1.20×(R-0.04)

0.07 = 1.20R-0.048

Collect like terms

0.07+0.048 = 1.2R

Divide both sides by 1.20

R= (0.07+0.048)/1.20

R=9.83%

Expected market return = 9.8%

3 0
3 years ago
Ehrmann Data Systems is considering a project that has the following cash flow and WACC data. What is the project's MIRR? Note t
jeka94

Answer:

the project's MIRR is 13.84 %

Explanation:

MODIFIED INTERNAL RATE OF RETURN (MIRR)

-It is the rate that causes the Present Value of the Terminal Value (Future Cash flows at the end of the Project) to equal Present Value of Cash outflows.

-MIRR assumes a reinvestment rate at the end of the project

The First Step is to Calculate the Terminal Value at end of year 3.

Terminal Value (FV) = Sum of (PV x (1 + r) ^ 3 - n)

                   = $450 x (1.09) ^ 2 + $450 x (1.09) ^ 1 + $450 x (1.09) ^ 0

                   = $534.65 + $490.50 + $450.00

                   = $1,475.15

The Next Step is to Calculate the MIRR using a Financial Calculator :

(-$1,000)          CFj

0           CFj

0           CFj

$1,475.15   CFj

Shift IRR/Yr 13.84 %

Therefore, the project's MIRR is 13.84 %.

6 0
2 years ago
Describe a product, and then give an example of a time when the demand for this product might be high and the demand for this pr
wariber [46]
Fitness service
around the time after new year cuz ppl start to getting fat cuz of earing too much during new year holidday l
aroung jan to mar that s when ppl start to be very fire up about getting in shape
6 0
3 years ago
1. What are the three stages in strategic management? Which stage is more analytical? Which relies most on empowerment to be suc
valkas [14]

Answer:

strategic management: strategy formulation, strategy implementation, and evaluation and control.

3 0
3 years ago
Mary Sunny began business as Sunny Law Firm on November 1. Record the following November transactions by making entries directly
Alenkinab [10]

Answer:

a.  

Dr. Cash   15000

Dr. Law Library (Asset) 6000

Cr. Mary (Capital Account) 21000

b.

Dr. Office equipment 7500

Cr. Account Payable  7500

c.

Dr. Cash   1500

Cr. Income / Revenue 1500

d.

Dr. Account Payable  3500

Cr. Cash   3500

e.

Dr. Account Receivable 4000

Cr. Income / Revenue 4000

f.

Dr. Marry (Capital Account) 2000

Cr. Cash   2000

g.

Dr. Cash   2500

Cr. Account Receivable (e) 2500

h.

Dr. Salary Expense  2500

Cr. Cash   2500

Explanation:

*Trial Balance and T accounts are made in an MS Excel file which is attached please find.

Download xlsx
3 0
3 years ago
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