Answer:
c. $5million
Explanation:
Net investment = Gross investment - Depreciation
Also, Net investment equals investment at the beginning of the year minus investment at the end of the year
Net investment = $15million - $10million
Net investment = $5million
Therefore, net investment during the year equals $5million
Answer:
Exposure to credit risk or interest rate risk.
Explanation:
Cost of capital refers to the average cost of equity and debt and this provides an insight into the capital structure of the company. Major factors affecting the cost of capital include;
a. The extent of international diversification: This will impact the possibility of the firm going bankrupt.
b. Access to international capital markets: These multinational companies have more access to reduced costs that stem from foreign financial support.
c. Size of the firm: The larger size of the firms will make these firms get more considerations from creditors.
d. Exposure to country risk: The risk of expansion also might lead to bankruptcy if things are not properly managed.
Answer:
B. Currently used manufacturing capacity that has alternative uses
Explanation:
Make or buy decision is the process involved in determining whether to produce a product in house or purchase it from an external supplier.
Manufacturing Capacity is described as the production capability of an object in a manufacturing process. The object could be an operator, a machine or even a work center. Every resource in a manufacturing process has its determinable capacity and this is a relevant cost to consider when determing whether to produce or buy a product.
Looking at the definition, it is clear that current capacity of manufacturing with alternative uses is important. In other words, it is very crucial to be able to determine the cost of using the current manufacturing capacity to either make the product in house and then weigh this cost against the cost of using the same manufacturing capacity to manufacture an alternate product.
It stands to reason, (although other costs are weighed) that the product production (current or alternate) that can be manufactured at a lesser cost should be chosen and this is a very crucial decision in a make-or-buy decision.
Looking at the other options, the golden rule is that any cost that is not a direct cost to the manufactur of a product in house or its outsourcing should be ignored in making the decision.
To get the total insurance premium, just add the three premiums:Total premium = liability + collision + comprehensivewhere:liability = $510collision = $220comprehensive = $ 130Total premium = $510+$220+$130 =$860