1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Harlamova29_29 [7]
4 years ago
8

Mary is in contract negotiations with a publishing house for her new novel. She has two options. She may be paid $100,000 up fro

nt, and receive royalties that are expected to total $26,000 at the end of each of the next five years. Alternatively, she can receive $200,000 up front and no royalties. Which of the following investment rules would indicate that she should take the former deal, given a discount rate of 8%?
Rule I: The Net Present Value rule
Rule II: The Payback Rule with a payback period of two years
Rule III: The internal rate of return (IRR) Rulea. Rule I onlyb. Rule III onlyc. Rule II and III onlyd. Rule I and II only
Business
1 answer:
Mazyrski [523]4 years ago
5 0

Rule I is correct.

<u>Explanation:</u>

Year Cash flow Pv at 8% Discounted cash flow

0           100000              1         100000

1            26000              0.9259 24074.074

2            26000               0.8573 22290.809

3             26000         0.7938 20639.638

4             26000      0.7350 19110.776

5             26000       0.6806 17695.163

From the above calculation, the net present value is $203810.46

          Option 1   Option 2

NPV 203810.5 200000

Payback    5 years   0 years

IRR             No IRR No IRR

NPV (Net present value) option say that former would be selected

So, answer is Rule I only.

You might be interested in
Current liabilities are a.due and to be paid out of current assets within one year b.payable if a possible subsequent event occu
777dan777 [17]

Answer:

a. due and to be paid out of current assets within one year

Explanation:

Current liabilities are the financial obligations that a business has to pay within one year and they can include short-term debt, dividends payable and accounts payable. These obligations are usually paid using current assets. So, according to this, the answer is that current liabilities are due and to be paid out of current assets within one year.

4 0
3 years ago
Which pathway includes the most self-employed workers?
cupoosta [38]
Where is the pathway?
7 0
4 years ago
A budget should include a balance sheet and a(n)
Gnom [1K]

Answer: income statement

Explanation:

7 0
3 years ago
Read 2 more answers
The demand for automobiles is expected to decrease this year. Other things being equal, which of the following is the best forec
irga5000 [103]

Answer:

A decrease in both the market equilibrium price and the market equilibrium quantity of autos sold.

Explanation:

A fall in the demand for automobiles would shift the demand curve to the left.

As a result of the leftward shift, both equilibrium price and quantity would fall.

I hope my answer helps you

7 0
3 years ago
Secure property rights promote economic progress because they
weqwewe [10]

Answer:

The correct answer is a. encourage individuals to produce efficiently and undertake productive activities.

Explanation:

The right to property is the legal and immediate power that a person has to enjoy, dispose and revindicate on an object or property, without affecting the rights of others or exceeding the limits imposed by law.

The property right covers all material assets that may be appropriate, useful, of limited existence and that may be occupied.

That is, if a person owns a space of land in which a sweet potato crop grows, therefore he owns the sweet potatoes that are harvested there and can do with them what seems most convenient, that is, sell them, give them away or donate them, always within the framework that limits the law.

6 0
3 years ago
Other questions:
  • Brenda's Bar and Grill has current liabilities of $15 million. Cash makes up 10 percent of the current assets and accounts recei
    11·1 answer
  • Nathan is working on the operating budgets for his company. He has already done the sales and production budgets, and he is now
    9·1 answer
  • Use the​ high-low method to determine the​ hospital's cost equation using nursing hours as the cost driver. Predict total overhe
    13·1 answer
  • Kohlman Company began its operations on March 31 of the current year. Projected purchases for the first three months of business
    11·1 answer
  • An increase in demand means that quantity demanded is higher at each price level. True or false
    15·1 answer
  • Clients with borderline personality disorder (BPD) are usually admitted to an inpatient setting because of what?
    14·1 answer
  • To test the validity of a selection test for advanced widget designers, Apptastic administers the test to its current widget des
    10·1 answer
  • If you were a manager in a company that operates in many countries, what criteria would you use to determine whether an applicat
    6·1 answer
  • Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 2016. The accounting cycle for Kelly Consulting for Ap
    7·1 answer
  • Georgia Corp. uses the indirect method to prepare the statement of cash flows. Refer to the following section of the comparative
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!