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Dvinal [7]
3 years ago
12

A company projects an increase in net income of $193500 each year for the next five years if it invests $900000 in new equipment

. The equipment has a 5-year life and an estimated salvage value of $300000. What is the annual rate of return on this investment?
Business
1 answer:
klio [65]3 years ago
6 0

Answer:

The Internal Rate of Return (IRR) 10,74%

Explanation:

We use excel or a spreadsheet to calculate this ratio. See document attached.

We use a cash flow to solve this problem.

At moment 0 we have the investment cost , in this case $900000. From period 1 to period 5, we have incomes o benefits of $1935000.

At period 5 we have to consider the estimated salvage value of $300000.

Then, we calculate the Net cash flow that is the difference between benefits and cost.

We use all the result (positive and negative) in Net cash flow to get the IRR.  

Download xlsx
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marginally attached staff and​ part-time staff that hope on getting​ full-time jobs

6 0
3 years ago
The law of diminishing returns states that, ceteris paribus, the
Vsevolod [243]

The law of diminishing returns states that, ceteris paribus, the rate of profit from an investment will continue to diminish as more capital ins invested into that product.

<h3>What is Ceteris Paribus?</h3>

Ceteris Paribus is a Latin phrase often quoted in economics that means "all things being equal". It is used to connote the fact that in the consideration of a law, sometimes it is assumed that all other factors are given or at play.

It is to be noted that the Law of Diminishing Returns is also applicable to Labor, Utility and Marginal Returns.

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6 0
2 years ago
Crystal's best friend Kerry complains about her boyfriend all the time: how he was late for their date and how he never brings h
adelina 88 [10]

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B

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3 0
3 years ago
If the USA could produce 1 ton of potatoes or 0.5 tons of wheat per worker per year, while Ireland could produce 3 tons of potat
Anuta_ua [19.1K]

Answer:

A. The USA specializes in potatoes because of its comparative advantage in producing potatoes.

Explanation:

US         1 ton of potatoes or 0.5 tons of wheat = 2

Ireland  3 tons of potatoes or 2 tons of wheat = 1,5

8 0
4 years ago
what was one argument made for the construction of the panama canal? responses it would result in lower tariffs on foreign goods
Aliun [14]

Based on a historical perspective the one argument made for the construction of the Panama Canal is that "<u>it would allow ships to move swiftly from the Atlantic and the pacific in the event of a war."</u>

<h3>The Construction of Panama Canal.</h3>

The construction of the Panama canal was done in 1914 and covers about 82 km of waterway in Panama that connects the Atlantic Ocean with the Pacific Ocean and splits up North and South America.

The Panama Canal construction was essential for the political economy of the United States it cuts across the Isthmus of Panama which serves as a conduit for maritime trade.

There are various reasons or arguments for the construction of the Panama canal.

<h3>The reasons for building the Panama canal are</h3>
  • It would prevent warfare among competing countries
  • It would lessen the distance, cost, and time it took for ships to carry cargo between the Atlantic and the Pacific Oceans
  • It would eliminate the danger of earthquakes in Nicaragua.

Hence, in this case, it is concluded that the correct answer is "<u>it would allow ships to move swiftly from the Atlantic and the pacific in the event of a war."</u>

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4 0
1 year ago
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