Answer:
What does the IRR rule say about whether you should accept this opportunity?
The IRR rule basically states that if the project's internal rate of return (IRR) is higher than the cost of capital (discount rate or WACC), then the project should be accepted. In this case, we are not given the company's WACC or any discount rate we can use, therefore there is nothing to compare the project's IRR against.
Based on prior experience, this project's IRR will not be very high and if we consider the cost of keeping the site clean forever, I really doubt that the project is profitable. If you calculate the project's IRR without including the perpetual cleaning cost, IRR = 11%.
If we assume any of the 3 WACCs I used as an example below, the project's IRR including cleaning costs:
- if WACC = 12%, then IRR = 9.26% REJECTED
- if WACC = 10%, then IRR = 8.98% REJECTED
- if WACC = 9%, then IRR = 8.79% REJECTED
- if WACC = 8%, then IRR = 8.54% ACCEPTED
In order for this project to be profitable, the WACC would need to be very low (around 8% or less).
Explanation:
cost of opening a new mine $120 million
annual cash flow $20 million
expected cleaning costs $2 per year in perpetuity
the cost of keeping the site clean forever = $2 million / discount rate or WACC:
- if WACC = 12%, then perpetual cost = $16.67 million
- if WACC = 10%, then perpetual cost = $20 million
- if WACC = 9%, then perpetual cost = $22.22 million
- if WACC = 8%, then perpetual cost = $25 million
Answer: -100
Explanation: 5,000 - 3,000 - 200, -1,900 =
Answer: d. money
Explanation: the flow of the resources, goods and services move around in a clockwise flow while money flow in an anticlockwise flow. This is to say without money, the flow of goods and services will be impossible.
I believe the answer is: D. patriotism
Patriotism is the act of showing vigorous support to our own country . The support that shown in patriotism does not revolve around financial decision, but more to how our country is perceived in its foreign nation relative to the other countries.
Answer and Explanation:
C) equals marginal cost: is upward-sloping
