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Svetlanka [38]
3 years ago
10

A construction company plans to invest in a building project. there is a 30% chance that the company will lose $30,000, a 40% ch

ance of a break even, and a 30% chance of a $60,000 profit. based on this information, what should the company do?
Business
2 answers:
daser333 [38]3 years ago
8 0

Answer:

Holding all other factors constant, the company should invest in the building project since the expected value of the project is a $ 9000 profit.

Explanation:

Scenario analysis is done when companies need to make decisions based on possible financial outcomes of a project or investment. The expected value of a project or investment would tell investors whether they are taking on a suitable level of risk given the likelihood of the anticipated return. The anticipated return is calculated as follows using the expected value formula:

Expected value (X) = Sum of [P(Xₙ) *Xₙ] where P is the probability of an event occurring(chance of occurrence and X is the event itself (Project outcome).

The expected value of the building project: $9, 000

Event              Probability     Event Value      Event Outcome

Loss                30% (0.03)     -($30,000)           -($9000) (0.03* -($30,000))

Break-even     40% (0.04)     $0                        $0 (0.04 *$0)

Profit               30% (0.03)     $60,000              <u>$18,000</u> (0.03 * $60, 000)

Expected Value                                                   <u>  </u><u>$9,000</u>

Given that the expected value of the project is positive, the company would take on the project holding all other factors constant. However, in a real world setting factors such as the company's risk profile, investment portfolio performance as well as whether the projected profit would meet their stipulated required rate of return, would have to be considered before the final decision to invest was made.

kati45 [8]3 years ago
7 0
<span>Based on this information, there is a a 30% chance of the company losing money and a 70% chance that they do not lose any money. However, there is also only a 30% chance that the company gains any profits from this deal. I would recommend that the company not invest in this building project as the rate of return is not high enough compared to the risk of no return.</span>
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a_sh-v [17]

Answer:

(a)- Its assets will​ increase, as will its equity

Explanation:

The commercial terms state FOB shipping​ point therefore the transfer succeeds once the cargo enter the port.

The sale is thus completed. The revenue can be recognize thus, increasing the company's equity and assets.

Account receivable(+Assets)     debit

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8 0
2 years ago
Which of the following errors would cause the adjusted trial balance to be unequal? a.The adjustment for accrued fees of $16,340
STALIN [3.7K]

Answer:

The answer is: B)The adjustment for prepaid insurance was omitted.

Explanation:

The adjusted trial balance is the last step before producing the financial statements of a company. Its format is identical to unadjusted balances, it has three columns: account names, debits and credits. The debit and credit columns are calculated at the bottom and should always be equal. If they aren’t equal, the trial balance was prepared incorrectly.

The only error that would cause the adjusted trial balance to be unequal (debts ≠ credits) is; The adjustment for prepaid insurance was omitted. Prepaid insurance should be debited and cash (or accounts payable) should be credited.

6 0
3 years ago
The Chief Information Officer (CIO) and the Managing Director (MD) of Illustrious Limited recently had the following conversatio
-Dominant- [34]

Answer:

Illustrious Limited

a) I sympathize with the MD.  He noted "We have been through these types of projects before, and what always ends up happening is that we do not get the new system we are promised. Instead, we get a modified version of the old system."  The implication of his assertion is that something is missing in the way the CIO and her team had been handling system development projects in the past.  Even the CIO acknowledged the MD's assertions by assuring "that this will not happen this time."  In the past, the system development team had neglected understanding "what is working well and what is not."  This should not be the case in any good system development.  Preliminary analysis or investigation should uncover users' requirements and then conduct a thorough system analysis before the design and other stages are carried out in an iterative process.

b) I would recommend SCRUM instead of the Waterfall methodology.  With Scrum, the system development project is teamwork.   The team is held accountable and SCRUM utilizes iteration to achieve well-defined goals.  The SCRUM framework "begins with a simple premise, starting with what can be seen or known before it tracks progress and tweaks as necessary," to achieve set goals defined by users' requirements.

Explanation:

a) System Development is a process that follows a system development life cycle (SDLC) methodology and involves these seven stages: requirement analysis, system analysis, system design, development or programming, testing, implementation and documentation, and evaluation and support.

b) SCRUM is a framework in SDLC which follows "a set of meetings, tools, and roles that work in concert to help teams structure and manage their work."  SCRUM has been described as "an agile way to manage a project," especially software development because of its "iterative and flexible approaches."

c)  Waterfall model, on the other hand, follows linear sequential phases of conception, initiation, analysis, design, construction, testing, deployment, and maintenance, and each stage depends on the deliverables of the previous stage.  This is why "in software development, it tends to be among the less iterative and flexible approaches, as progress flows in largely one direction ("downwards" like a waterfall) through the phases."

4 0
3 years ago
. Demand-pull inflation occurs when multiple choice 1 there is a negative GDP gap. there is a negative price gap. there are incr
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When there prices rise because of an increase in aggregate spending not fully matched by an increase in aggregate output, then, an economy is experiencing a Demand-pull inflation.

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Therefore, the Option C is correct because when there prices rise because of an increase in aggregate spending not fully matched by an increase in aggregate output, then, an economy is experiencing a Demand-pull inflation.

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<em>brainly.com/question/18072639</em>

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