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Reika [66]
3 years ago
14

Joe and Rich are both considering investing in a project that costs $25,500 and is expected to produce cash inflows of $15,800 i

n Year 1 and $15,300 in Year 2. Joe has a required return of 8.5 percent but Rich demands a return of 12.5 percent. Who, if either, should accept this project?A) Joe, but not RichB) Rich, but not JoeC) Neither Joe nor RichD) Both Joe and RichE) Joe, and possibly Rich, who will be neutral on this decision as his net present value will equal zero
Business
1 answer:
miv72 [106K]3 years ago
8 0

Both Joe and Rich should accept this project.

D) Both Joe and Rich

<u>Explanation:</u>

NPVJoe= $25,500 + $15,800 / 1.085 + $15,300 / 1.085^2

NPVJoe= $2,058.88

NPVRich= –$25,500 + $15,800 / 1.125 + $15,300 / 1.125^2

NPVRich= $633.33

Here Joe and Rich both invested a total amount of $25,500 and they are expected to get cash inflows of $15,800 and $15,300 in the year 1 and year 2 respectively they both has their own different rates of return i.e. 8.5% and 12.5% so we can calculate the net principle value of Joe is $2,058.88 and that of Rich is $633.33.

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In order to accurately determine the financial performance of a company, financial statements are used in evaluating, which include the balance sheet,  statement of cash flows, and the income statement.

Financial performance indicators are quite necessary as they are quantifiable metrics which are used to measure how well a company is doing. Some companies also hire an outside accounting firm to audit the financial statements.

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3 years ago
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3 years ago
At the beginning of its current fiscal year, Willie Corp.’s balance sheet showed assets of $10,100 and liabilities of $6,900. Du
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Answer:

Dividends = 6,000

Explanation:

Ending liabilities = Beginning liabilities - Decrease in liabilities

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Ending net assets = Ending total assets - Ending total liability

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Ending total assets = $3,900 + $5,700

                                = $9,600

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3 0
3 years ago
Marco, Jaclyn, and Carrie formed Daxing Partnership (a calendar-year-end entity) by contributing cash 10 years ago. Each partner
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a. The hot assets per Section 741(a) for this sale are as follows:

i. Accounts receivable

ii. Inventory

iv. Potential depreciation recapture in the equipment

b. Marco's gain or loss on the sale of his partnership interest is $33,000.

c. The character of Marco's gain or loss is <u>iv. $33,000 capital gain</u>.

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A partnership interest refers to a partner's ownership and benefits that accrue from the partnership.

The partnership interest entitles the partner to participate in the distribution of profits and losses arising from the partnership business.

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