_____ is the process of acquiring, maintaining, and growing profitable customer relationships by delivering unmatched value.

you are considering a project with an initial cash outlay of $80,000 and expected free cash flow of $20,000 at the end of each y

alexgriva [62]

Answer:

Payback period: 4 years

NPV: $87,105

PI: 1.089

IRR: 12.98% (rounded to 2 decimal places)

Explanation:

Payback period is the time taken to recover the initial capital outlay of an investment assuming no interruption of anticipated net cash flow or free cash flow. Computed by dividing initial investment by the anticipated cash flow per year. ($80, 000/$20, 000) = 4 years

Net Present Value (NPV) e is used to analyse the profitability of an investment by discounting future anticipated cash flows. The formula for computing NPV is: [(Cash flows)/(1+r)i] where cash flows is the anticipated cash flow each year,, r is the discount rate, in this case, required rate of return and the i indicated the time period. The NPV is calculated as: [(20,000/(1.1) +20,000/(1.1)^1 +20,000/(1.1)^2 +20,000/(1.1)^3 +20,000/(1.1)^4 +20,000/(1.1)^5 + 20,000/(1.1)^6] = $87, 105

Profitability Index is used to quantify the amount of value created per unit of investment. It is computed as: Net Present Value/ Initial Investment , that is, $87105/$80,000 = 1.089. This means that for every dollar invested, the project generates value of $1.089

Internal Rate of Return (IRR) makes the present value of the project equal to zero. The higher the IRR , the more profitable the project. In this case, the most accurate way this value can be computed is by using a calculator and computing the IRR. N (time period) = 6 , PV(present value of initial investment) = -80, 000, PMT (cashflows per year) = 20,000 Comp I/Y (rate of return) = 12.978%

The variables computed above indicate that undertaking this project would be profitable for the company.

7 0

3 years ago

Lauren is the owner of a bakery that earns 0 (zero) economic profit. last year, her total revenue was $145,000, her rent was $12

lara31 [8.8K]

The total cost would be 237,000

4 0

4 years ago

A building was purchased for $66,500. The asset has an expected useful life of eight years and depreciation expense each year is

Sidana [21]

Answer:

$34,500

Explanation:

Depreciation is the systematic allocation of the cost of an asset to p/l based on its estimated useful life.

Assets are initially recorded at cost be carried subsequently at the net book value which is the cost less residual or salvage value then divided by the estimated useful life. Mathematically, using the straight line method,

Depreciation = (cost - residual value)/useful life

let the residual value ( which is the estimated value obtainable from the disposal of the asset at the end of its estimated useful life) be p

4000 = (66500 - p)/8

32000 = 66500 - p

p = 66500 - 32000

= $34,500

4 0

4 years ago

Say, 3 customers enter a store. On the basis of past experience, the store manager estimates the probability that any one custom

vaieri [72.5K]

The probability that two of the next three customers will make a purchaseis mathematically given as

P(1) =0.441

<h3>What is the probability that two of the next three customers will make a purchase?</h3>

Generally, the equation for Probablity is mathematically given as

A)

P(1) = 3 C 1 (0.3)^1 (0.7)^2

P(1) =0.441

B)

n=1000

E (x) =np = 1000x0.3

E (x) =3.00

C)

Variance= mpq

Variance= 300 x0.7

Variance= 210

In conclusion,

P(1) =0.441

E (x) =3.00

Variance= 210