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Nonamiya [84]
3 years ago
9

You are analyzing a project with an initial cost of £130,000. The project is expected to return £20,000 the first year, £50,000

the second year, and £90,000 the third and final year. There is no salvage value. The current spot rate is £.8211. The nominal risk-free return is 5.0 percent in the U.K. and 6.5 percent in the U.S. The return relevant to the project is 15 percent in the U.S. Assume that uncovered interest rate parity exists. What is the net present value of this project in U.S. dollars?
Business
1 answer:
Mashutka [201]3 years ago
3 0

Answer: Net Present Value = -$19,062

Explanation:

First, we'll compute the PV for the respective years

Present Value (Year-1)

= 0.6211 \times [1 + (0.055 - 0.06)]^{1}

=0.6179945

Present Value (Year-2)

= 0.6211 \times [1 + (0.055 - 0.06)]^{2}

=0.614904528

Present Value (Year-3)

= 0.6211 \times [1 + (0.055 - 0.06)]^{3}

=0.611830005

Now, we'll compute the Cash Flow for the respective years

Cash Flow (Initial)

= -130,000\times (\frac{1}{0.6211} )

= -$209,306.07

Cash Flow (Year-1)

=20,000\times (\frac{1}{0.61799} )

=$32,362.75

Cash Flow (Year-2)

=50,000\times (\frac{1}{0.61490} )

=$81,313.44

Cash Flow (Year-3)

= 90,000\times (\frac{1}{0.611830} )

=$147,099.68

Net Present Value:

= -$209,306.07 + ($32,362.75/1.141)+ ($81,313.44/1.142) +($147,099.68/1.143)

= -$209,306.07 +$28,388.38 + $62,568.05 + $99,288.10

= -$19,062

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Answer:

Depreciation expense= $7,612.5

Explanation:

Giving the following information:

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Salvage value= $5,100

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<u>First, we need to determine the depreciation expense for the whole year. We will use the following formula:</u>

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Annual depreciation= 2*[(book value)/estimated life (years)]

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Annual depreciation= $15,225

<u>For 2020:</u>

Depreciation expense= (15,225/12)*6= $7,612.5

3 0
3 years ago
You want to invest $20,000 today to accumulate $32,000 for graduate school. If you can invest at an interest rate of 10% compoun
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Answer:

N = 5 years

Explanation:

At first we have to calculate the number of periods to determine at which part of the table we should look at.

Given,

PV = $20,000

FV = $32,000

Interest rate, i = 0.10 (10%)

Number of periods, n = ?

We know, Future value, FV = PV × (1+i)^{n}

or, $32,000 = $20,000 × (1 + 0.10)^{n}

or, 1.6 = 1.10^{n}

As the factor is 1.6, we will look at the following image which is the FV factor table to find the number of periods.

We can find it in a different way too.

log 1.6 = n log 1.10

or, n = \frac{log 1.6}{log 1.10}

or, n = 4.93 years

Therefore, n = 5 years

8 0
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an organization that seeks to operate efficiently and effectively to achieve its goals without focusing on profit as a motive
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Answer: A non profit organization

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They most times function in the area of humanitarian needs, health and medicine, financially empowering the unemployed in communities.

The non profit organization are most times sponsored by government of nations, international bodies ( such as UN, WHO, UNESCO).

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Bart works as an accountant for Good Times Restaurant. He is responsible for not only keeping the books current but also for mak
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3 years ago
The 10 million U.S. residents with the highest SES (and the best health care) outlive the 10 million with the lowest SES who liv
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The 10 million U.S. residents with the highest SES outlive the 10 million with the lowest SES who live in rundown areas by about  <u>30</u> years.

<h3>What is socioeconomic status (SES)?</h3>

Socioeconomic status can be defined as the status of people in a society or community as based on the followings:

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In the United State of America people who are educated and earn higher income including having the best health care tend to live longer compare to those who live in a very poor condition and has a  lowest SES.

Inconclusion 10 million U.S. residents with the highest SES outlive the 10 million with the lowest SES who live in rundown areas by about  <u>30</u> years.

Learn more about socioeconomic status here:brainly.com/question/3867614

7 0
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