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Allushta [10]
3 years ago
10

Joe and Rich are both considering investing in a project with the following cash flows. Joe is content earning a 9 percent retur

n, but Rich desires a return of 16 percent. Who, if either, should accept this project?year cash flow 0 -$25,000 1 13,700 2 18,400 a. joe, but not rich b. rich but not joe c. neither joe nor rich d. both joe and rich e. joe and possibly rich who will be neutral on this decision as his net present value will equal zero those are my choices
Business
1 answer:
vampirchik [111]3 years ago
5 0

Answer:

d. both joe and rich 

Explanation:

To determine who should accept the project, the net present value should be calculated.

The net present value is the present value of after tax cash flows from an investment less the amount invested.

The net present value can be calculated using a financial calculator

Cash flow in year 0 =  -$25,000

Cash flow in year 1 = 13,700

Cash flow in year 2 = 18,400

Rich 's discount rate = 16%

Richs NPV = $484.54

Joe's discount rate = 9%

Joes NPV = $3,055.72

The decision rule with NPV is to invest if NPV is greater than zero

Since NPV is greater than zero for both rich and joe, they should both accept it.

To find the NPV using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

I hope my answer helps you

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Answer:

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Explanation:

we can use an excel spreadsheet and the present value function to calculate the expected price of each bond ⇒ =PV(rate,nper,pmt,fv,[type])

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=PV(5%,60,36.25,1000) = -739.72 since excel calculates the initial investment, it is always negative, so we just change the sign.

6 0
3 years ago
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a local pizza parlor is selling two different shapes of cheese pizza for the same price. You can get two small square pizza that
Mamont248 [21]

Answer:

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Explanation:

We can see this as a simple geometry problem. Which is the largest area? Two squares of 8 inches side or a 14 inch diameter circle? Let's see. The area of the square is side * side, in this case 8 * 8, so we have 64 squared inches  in each of the two pizzas. That makes a total of 128 squared inches (64 + 64) for the two small squared pizzas. Now to calculate the circle, we must do the following formula: \pi *r^{2} where r is the radium of the circle. The radium is half of the diameter, in this case 14/2=7. So the formula is 7^2, that is to say 49, multiplied by pi. This gives us approximately 153.93 squared inches, which is bigger than 128. A large round pizza with 14 inches of diameter gives more pizza.

We can also think that most people don't like the crust of the pizza. Two pizzas have more crust than one. So one pizza, besides being bigger, can save you to eat the crust and more cheese and sauce.

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Answer:

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