Answer:
The projects net present value = −$1,104,607
Explanation:
The net present value is the sum of the present values of all expected cash-flows from t=0 to t=n
The equal cash-flows of $500,000 expected at the end of each year from year 1 to year 5 are an annuity whose present value is calculated as follows:
PV of An Ordinary Annuity= ![\frac{PMT[1-(1+i)^{-n} ] }{i}](https://tex.z-dn.net/?f=%5Cfrac%7BPMT%5B1-%281%2Bi%29%5E%7B-n%7D%20%5D%20%7D%7Bi%7D)
where PMT is the the equal payment cash inflow received at the end of each period
i is the project's cost of capital and
n is the number of periods making the annuity
Therefore: Net Present value of this investment given a 10% project cost of capital is calculated as follows:
NPV=![-$3million + \frac{($500,000*[1-(1+0.1)^{-5} ]) }{0.1}](https://tex.z-dn.net/?f=-%243million%20%2B%20%5Cfrac%7B%28%24500%2C000%2A%5B1-%281%2B0.1%29%5E%7B-5%7D%20%5D%29%20%7D%7B0.1%7D)
=-$1,104,606
Based on the stay even analysis, it can be concluded that a 7% increase in price would lead to a decrease in the quantity demanded.
<h3>
How to explain the stay even analysis?</h3>
The stay even analysis %ΔQd = %ΔP/(%ΔP +margin) can be used to determine if a price increase of 7% would result in a decrease in quantity demanded that is less than the increase in quantity demanded.
The optimal prices by region are Southwest region $311; Upper West region $278; and Northeast $240. The stay even analysis for the Southwest region is as follows:
%ΔQd = %ΔP/(%ΔP +margin)
= 7%/7.5% = 93.33%.
This means that a 7% increase in price would result in a decrease in the quantity demanded.
Learn more about even analysis on:
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Answer:
Savings at the end of seven years would be $11,374.32
Explanation:
Given:
Money deposited in savings account at the end of the year (pmt) = $1060
Annual interest earned (rate) = 14%
Time period (nper) = 7 years
It is an annuity as money is deposited every year. In order to compute the amount available at the end of 7th year, future value annuity needs to be computed.
Spreadsheet function FV can be used to compute the same.
=FV(rate,nper,PMT,PV)
Savings at the end of 7th year is $11,374.32.
Note: PV is 0.
Answer:
Business A
Journal Entries:
Debit Accounts Payable $96,000
Credit 10% Notes Payable $96,000
To record the issuance of a 60-day, 10% note to a creditor on account.
Debit 10% Notes Payable $96,000
Debit Interest Expense $1,600
Credit Cash $97,600
To record the payment of the note at maturing, including interest.
Explanation:
a) Data and Analysis:
Accounts Payable $96,000
10% Notes Payable $96,000
10% Notes Payable $96,000
Interest Expense $1,600
Cash $97,600
