1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Step2247 [10]
3 years ago
8

Boulderado has come up with a new composite snowboard. Development will take Boulderado four years and cost $250,000 per year, w

ith the first of the four equal investments payable today upon acceptance of the project. Once in production the snowboard is expected to produce annual cash flows of $200,000 each year for 10 years. Boulderado's discount rate is 10%. The IRR for boulderado's snow board project is closest to :
A. 10.4%

B.10.0%

C.11.0%

D.15.1%

Business
1 answer:
frez [133]3 years ago
6 0

Answer:

The answer is C: 11%

Workings for NPVs are attached.

Explanation:

What Is Internal Rate of Return – IRR?

The internal rate of return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments. The internal rate of return is a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero. IRR calculations rely on the same formula as NPV does.

<u>Tip:</u>

To calculate the IRR we need to perform a hit and trial method - rule of thumb is, use the discount factor, that give one positive and one negative NPV, suppose, if 10% discount factor gives a positive NPV, we should choose the second discount factor that is above 10%, so the cost of investment will be high and thus giving us a negative NPV.

<u>IRR calculations:</u>

<u>Key metrix used:</u>

Discount factor (rₐ) = 10% (lowest discount factor)

NPV at lowest discount factor = 51,608

Discount factor (rb) = 15% (highest discount factor)

NPV at highest discount factor = - 161,000

<u>IRR Formula:</u>

IRR Formula = rₐ +\frac{NPVa}{NPVa - NPVb} × (rb - ra)

IRR Formula = 10% + \frac{51,608}{51,608 - (-161,000)} × (15% - 10%)

IRR Formula = 11%

You might be interested in
Net interest margin—often referred to as spread—is the difference between the rate banks pay on deposits and the rate they charg
Minchanka [31]

Answer:

(a) P(X\:>\:5.40)=0.9938

(b) P(X\:

(c) X=4.975 percent

Explanation:

(a) Find the z-value that corresponds to 5.40 percent

.Z=\frac{X-\mu}{\sigma}

Z=\frac{5.40-4.15}{0.5}

Z=\frac{1.25}{0.5}=2.5

Hence the net interest margin of 5.40 percent is 2.5 standard deviation above the mean.

The area to the left of 2.5 from the standard normal distribution table is 0.9938.The probability that a randomly selected U.S. bank will have a net interest margin that exceeds 5.40 percent is 1-0.9938=0.0062

(b) The z-value that corresponds to 4.40 percent is Z=\frac{4.40-4.15}{0.5}=0.5The net interest margin of 4.40 percent is 0.5 standard deviation above the mean.

Using the normal distribution table, the area under the curve to the left of 0.5 is 0.6915

Therefore the probability that a randomly selected U.S. bank will have a net interest margin less than 4.40 percent is 0.6915

(c)  The z-value that corresponds to 95% which is 1.65

We substitute the 1.65 into the formula and solve for X.1.65=\frac{X-4.15}{0.5}

1.65\times 0.5=X-4.150.825=X-4.15

0.825+4.15=X

4.975=X

A bank that wants its net interest margin to be less than the net interest margins of 95 percent of all U.S. banks should set its net interest margin to 4.975 percent.

6 0
3 years ago
Ira orally agrees to buy a unique collection of sports memorabilia for $1,000 from Jane and sends her $250 as a down payment. Wh
OLEGan [10]

Ira should seek specific performance.

  • A particular remedy called specific performance is utilized by courts when no other option, such monetary compensation, will fully satisfy the other party. The court will choose that option instead if it will put the injured party in the same situation as if the contract had been fully completed.
  • A court may order a party to carry out a specific conduct, such as completing the contract's performance, as a form of equitable relief under the law of contracts.
  • If damages are a suitable alternative, it is normally not accessible but is typically available in the sale of land law. Contracts for personal services nearly seldom allow for specific performance.

Thus this is the answer.

To learn more about Contracts, refer: brainly.com/question/984979

#SPJ4

6 0
1 year ago
Sally Smith decided to start a sea shell business. Her initial investment in the business consisted of $10,000 in cash. Record t
tensa zangetsu [6.8K]

Based on the transaction that Sally engaged in, recording it will involve:

  • Debiting cash for $10,000.
  • Crediting equity for $10,000.

<h3>Recording Sally's transaction. </h3>
  • The cash transaction is an investment which will be recorded in the Shareholder's Equity account.
  • The investment came in cash so will go to the cash account.

When cash is increased as was the case here, it should be debited. When equity increases as was the case here once more, it is to be credited.

Find out more on shareholder's equity at brainly.com/question/26384373.

8 0
2 years ago
if you’ve just recovered from prostate cancer within the last few years, an insurance company might require you to pay a 20% ext
lesya692 [45]

Answer:

Gross premium = $100

Monthly Net premium = $70

Therefore 70 x 12 x 3 = 2,520

= 20% of 2, 520

2,520/100 x 20/1

GMP (Gross Monthly Premium) = $540

4 0
3 years ago
Economic efficiency in a competitive market is achieved when
Ludmilka [50]

Answer:

when you operate with your own products

Explanation:

economically doing well on business and people loving the pricws

6 0
3 years ago
Read 2 more answers
Other questions:
  • During an annual review Mitchel made the following assertion: "When I look at myself and my performance I see that what I have a
    13·2 answers
  • Suppose consumption demand of GDP decreases during a recession while the other demands are unaffected. What happens to the equil
    12·1 answer
  • Which of the following is not an example of a significant noncash transaction? Conversion of bonds into common stock. Sale of pl
    14·1 answer
  • Who is Lady gaga? what is she know for?
    14·2 answers
  • 1. Collecting Information to Compose Messages Before beginning to compose a successful business message, you need to collect nec
    9·1 answer
  • Jonas doesn't want to keep his savings in an account because he doesn't want to pay bank fees. Which of the following is an argu
    9·1 answer
  • Critically discuss SIX causes of differences in accounting practices used in different countries.
    14·1 answer
  • On January 1, 2021, for $18.9 million, Cenotaph Company purchased 10% bonds, dated January 1, 2021, with a face amount of $20.9
    9·2 answers
  • Dawson Electronic Services had revenues of $106,000 and expenses of $63,000 for the year. Its assets at the beginning of the yea
    11·1 answer
  • The American system of democracy would be in serious trouble without ______. a. print media b. a monopoly on news media c. the r
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!