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rosijanka [135]
2 years ago
9

The internal rate of return (IRR) refers to the compound annual rate of return that a project generates based on its up-front co

st and subsequent cash flows. Consider the case of Blue Llama Mining Company:

Business
1 answer:
Sav [38]2 years ago
5 0

Answer:

The answer and procedures of the exercise are attached in the following archives.

Explanation:

Consider this explanation too

The IRR is the project’s expected rate of return, assuming that intermediate cash flows also earn the IRR. If this return exceeds the cost of the capital invested in the project, the excess value goes to the firm’s shareholders. Therefore, independent projects whose IRR is greater than the WACC should be accepted.

Therefore in this case WACC of the project is 7% and IRR of the project is 1.86% which is less than WACC of the project. Hence the firm reject the project delta.

Calculation of IRR is based on Cash inflows and outflows for the number of years so that increase in cost of capital will not affect IRR.

You might be interested in
Case 6.1 Demand for Gas Guzzlers
Rus_ich [418]

Question 1.: From the standpoint of an automobile company, what sources of information in this article offer secondary data?

Answer:  The

National Automobile Dealers Association surveyed consumers

visiting its Web site for information about car purchases, and it

learned they ranked price as most important, followed by make and

model, then performance. Fuel economy ranked last, with 3 percent

considering it most important and 11 percent considering it least

important.

Question 2: Suggest two or three other sources of data that might be of

interest to auto companies interested in forecasting demand.

Answer: Data from Automotive News,General Motors, and  data

from the shoppers who visit Web sites such as www.kbb.com to look

up information.

Question 3: Online or at your library, look for information about recent

trends in SUV purchases. Report what you learned, and forecast whether SUV sales are likely to recover or continue

Answer: I don't know your library.

Explanation: This took me so long to do. Now my back hurts and my eyes are blurry. Hope this helps!

8 0
1 year ago
In its first year of operations, Grace Company reports the following:
ANEK [815]

Answer:

D) $25,000.

Explanation:

The Accrual Basis of Accounting is the process in which income earned or expenses incurred are recorded at the time the transaction takes place, whether or not the cash has been exchanged.

Net Income is derived by subtracting Expenses from Revenue.

N.B. Prepaid Expenses are Advance Payments towards expenses and are a Balance Sheet Items and will not be recorded under Net Income Calculations until the Expenses are realized.

So, The Net Income can be calculated as follows;

Revenue $60,000

Less: Expenses $35,000

Net Income $25,000

Hence Option D will be correct answer.

#NETINCOME

#PREPAIDEXPENSES

#ACCRUALBASISOFACCOUNTING

5 0
3 years ago
Nonuniform Inputs, Equivalent Units Terry Linens Inc. manufactures bed and bath linens. The bath linens department sews terry cl
anyanavicka [17]

Answer:

For Material 80,000

For Conversion 72,000

Explanation:

The computation of equivalent units of production for the bath linens department for August is shown below:-

                                     <u>Materials</u>               <u>Conversion</u>  

Units completed and

transferred out              60,000                   60,000

Units in process,

August 31                      20,000                   12,000

                                                               (20,000 × 60%)

Equivalent units of

production                   80,000                   72,000

Therefore to reach out the equivalent units of production we simply added the units completed and transferred out with Units in process Aug 31 of material and conversion.

4 0
3 years ago
Which report is constructed immediately prior to preparing the financial statements with the purpose of demonstrating that the a
White raven [17]

The report that is constructed immediately prior to preparing the financial statements with the purpose of demonstrating that the accounts balance  is called : Adjusted trial balance

<h3>What is an adjusted trial balance?</h3>

Adjusted trial balance is an account prepared that shows the arithmetic accuracy of the ledger. This balance list the general ledger account balances after any adjustments have been made.

An adjusted trial balance include:

  • Adjustment for prepaid and accrued expenses.
  • Depreciation

Therefore, an adjusted trial balance is a report, constructed immediately prior to preparing the financial statements with the purpose of demonstrating that the accounts balance.

Learn more about adjusted trial balance here: brainly.com/question/14274904

3 0
2 years ago
parking lot charges $5.00 for the first two hours of parking and $0.75 for each additional half hour or part thereof. Of Sam par
disa [49]

Answer:

$14.50

Explanation:

Given;

Charge for first 2 hours = $5.00 and

$0.75 for each additional half hour or part thereof.

If he parks his car for 8 hours, then the first 2 hours will be charged at a rate of $5.00

Time left to charge is 6 hours. This will be charged at a rate of $0.75

Therefore cost to Sam for parking his car for 8 hours

= (2 × $5) + (6 × $0.75)

= $10 + $4.50

= $14.50

Sam paid $14.50 for parking.

7 0
3 years ago
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