Answer:
The correct answer is letter "C": competitive barrier.
Explanation:
Competitive barriers represent obstacles for a business to start operations based on what other companies are already providing to the market. The settled companies -competitors- tend to have a preference and market share obtained through years of operations which is a threat for a new company that is looking for attracting consumers.
Answer:
The answer is A. non-operating expense
Explanation:
As he operates a retail shop, such advertising is vital to attract customers to the shops and to make potential sales. We can't treat this expenses as administration or production expenses.
We consider this as non operational because advertising is not an operational part of the operations of a retail business. Moreover, we can't consider it as selling expenses because they are mostly incurred during the sales process.
Answer:
a. 1.096
Explanation:
The present value index is the same as the profitablility index(PI), which is computed by dividing the present value of future cash inflows by the initial investment(the present value of cash outflows). A profitability of above 1 means that the project is viable as the numerator(PV of cash inflows) exceeds the denominator( initial cash outlay).
Project A PI index= Present value of cash inflows/Present value of cash outflows
Project A PI index= $84,360/$77,000
Project A PI index= 1.096
<u>Solution and Explanation:</u>
<u>
Answer:1</u> The total annual cash inflows associated with the new machine for capital budgeting purposes is:
=$10000
<u>Answer:2 </u>The internal rate of return promised by the new machine to the nearest whole percent is:
Particulars Year Amount ($)
Cash outflow 0 -40000
Cash inflow 1 10000
2 10000
3 10000
4 10000
5 10000
6 10000
IRR 13%
=13% using IRR function in excel.
<u>Answer:3</u> IRR=17%
with salvage value
Particulars Year Amount ($)
Cash outflow 0 -40000
Cash inflow 1 10000
2 10000
3 10000
4 10000
5 10000
6 22000
IRR 17%
using IRR function in excel.
