A currency trader observes the following quotes in the spot market: 1 U.S. dollar = 122 Japanese yen 1 British pound = 2.25 Swis
1 answer:
You might be interested in
Answer:
a. 4.91
b. 2.50 days
Explanation:
a. Inventory turnover
= Cost of goods sold / Average inventory
Average inventory =( Ending inventory + Opening inventory) / 2
= (4,676,000 + 4,190,000) / 2
= $4,433,000
Inventory turnover = 21,766,030 / $4,433,000
= 4.91
b. Days' sales in average receivables
= Average Account Receivables / Average daily sales
Average account receivables = (Ending receivables + Opening receivables) / 2
= (100,800 + 378,500) / 2
= $239,650
Average daily Sales = Sales / 365
= 34,988,900 / 365
= $95,860
Days' sales in average receivables = 239,650 / 95,860
= 2.50 days
Answer: D. 15%
Explanation:
The IRR is the discount rate that will make the Net Present Value to be 0.
In other words, the IRR is the discount rate that will make the cash inflow from the investment to be equal to the investment amount.
As the cashflow is constant, it is an annuity and so can be calculated by the Present Value Interest Factor.
Investment cost = $1,100,000
Using the options given;
Discount rate - 14%
Present Value of Cash inflow = 676,507 * Present Value of Annuity factor, 14%, 2 years
= 676,507 * 1.647
= $1,114,207.029
1,114,207.029 ≠ 1,100,000
Discount rate - 15%
Present Value of Cash inflow = 676,507 * Present Value of Annuity factor, 15%, 2 years
= 676,507 * 1.626
= $1,100,000.382
= $1,100,000
IRR is 15% as Present value of Cash inflow is equal to Investment cost at a discount rate of 15%.
