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Semmy [17]
3 years ago
13

A project is expected to create operating cash flows of $22,500 a year for three years. The initial cost of the fixed assets is

$50,000. These assets will be worthless at the end of the project. An additional $3,000 of net working capital will be required throughout the life of the project. What is the project’s net present value if the required rate of return is 10%?
Business
1 answer:
astra-53 [7]3 years ago
6 0

Answer:

Net Present Value = $58,188 - $53,000 = $5,188

Explanation:

Net Present Value = Net Cash Inflow - Net Cash Outflow

Computing Net Cash Inflow Discounted @10% PV factor for each year =  \frac{1}{(1 + r){^n}} Where, r = interest rate = 10%, and n = period that is for year 1 = 1 for year 2 = 2 and for year 3 = 3

Year            Cash Inflow           PV Factor        PV

1                    $22,500                0.909              $20,452.5

2                   $22,500                0.826              $18,585

3                   $22,500                0.751                $16,897.5

3                   $3,000                   0.751               $2,253 (Working capital will be realized at end of project)

Net Cash inflow                                                  = $58,188

Net Cash outflow = Cost of fixed asset + Cost of working capital initially incurred

                      = $50,000 +  $3,000 = $53,000

Net Present Value = $58,188 - $53,000 = $5,188

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SCI just paid a dividend of $2.16 per share, and its annual dividend is expected to grow at a constant rate of 4.50% per year. I
guajiro [1.7K]

Answer:

$33.44

Explanation:

The computation of the intrinsic value of the share is shown below:

= Next year dividend ÷ (Required rate of return - growth rate)

where,

Next year dividend is

= $2.16 + $2.16 × 4.50%

= $2.16 + $0.0972

= $2.2572

The required rate of return is 11.25%

And, the growth rate is 4.50%

So, the intrinsic value is

= ($2.2572) ÷ (11.25% - 4.50)

= $33.44

8 0
3 years ago
Assuming no change in government spending, an decrease in taxes of $80 billion with an mpc of 0.50 will add a total of $________
Scilla [17]

Assuming no change in government spending, a decrease in taxes of $80 billion with an mpc of 0.50 will add a total of $<u> 400 </u>billion to the economy after the multiplier effect.

The economy is defined as the management of financial matters in communities, businesses, or families. An example of an economy is the US stock exchange system.

A standard definition of the economy might describe economics as a social science focused on meeting needs and desires through the allocation of scarce resources with alternative uses. Going further, we can say that economy is the study of scarcity and choice. The economy is defined as the management of financial matters in communities, businesses, or families. An example of an economy is the US stock exchange system.

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4 0
2 years ago
Economists differ in their views of the role of the government in promoting economic growth. At the very least, the government s
Sloan [31]

Answer:

The correct answer is A) Lend support to the invisible hand by maintaining property rights and political stability .

Explanation:

The absence of the government in legislative tasks related to the market is, therefore, one of the main bases of the economic theory developed by Adam Smith throughout his bibliographical work. For Smith, the leaders must deal with other areas of control more focused on defense or justice, leaving the market to its free operation.

The invisible hand presupposes that there is an inertia by which the market and its self-regulation leads individuals to make the best decisions for the majority of the population to achieve well-being. In other words, it is a kind of automatic control mechanism that compensates the actions taken as a whole, regulating social conformations.

Therefore, it is assumed that the self-regulation facilitated to the markets helps to achieve an optimal market. To do this, individuals must behave in such a way that they can act without state mediation and in pursuit of their own interest.

The metaphor of the invisible hand also supposes that individuals are encouraged or held back to produce or not to follow the level of prices that exist in the market. Prices and profits are sufficient indicative to know when to participate in the market or not. Basically, if there is profit in a market niche, this supposes a stimulus for production, while losses lead individuals to quit.

7 0
3 years ago
Balance sheet and income statement data indicate the following:
Law Incorporation [45]

Answer:

The correct option is d. 5.5.

Explanation:

Note: This question is not properly arranged. It is therefore rearranged before answering the question as follows:

Balance sheet and income statement data indicate the following:

Bonds payable, 10% (due in two years)                              $842,000

Preferred 5% stock, $100 par (no change during year)       220,000

Common stock, $50 par (no change during year)             1,672,000

Income before income tax for year                                       376,000

Income tax for year                                                                  89,000

Common dividends paid                                                         83,600

Preferred dividends paid                                                          11,000

Based on the data presented, what is the times interest earned ratio (rounded to one decimal place)?

Oa. 7.9

Ob. 4.5

Oc. 3.5

Od. 5.5

The explanation of the answer is now given as follows:

The times interest earned ratio can be calculated using the following formula:

Times interest earned ratio = EBIT / Interest expenses ................ (1)

Where;

Interest expenses = Bonds payable * 10% = $842,000 * 10% = $84,200

EBIT = Earnings before interest and taxes = Income before income tax for year + Interest expenses = $376,000 + $84,200 = $460,200

Substituting the values into equation (1), we have:

Times interest earned ratio = $460,200 / $84,200 = 5.46555819477435

Rounded to one decimal place, we have:

Times interest earned ratio = 5.5

Therefore, the correct option is d. 5.5.

4 0
3 years ago
What could happen if you do not keep track of your checks you write?
velikii [3]
Nothing really, you just might have a better idea of your budget if you do.
3 0
3 years ago
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