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nasty-shy [4]
3 years ago
9

A firm evaluates all of its projects by applying the IRR rule. The current proposed project has cash flows of -$27,048, $16,850,

$15,700, and $4,300 for years 0 to 3, respectively. The required return is 19 percent. What is the project IRR
Business
2 answers:
laiz [17]3 years ago
8 0

Answer:

The question is incomplete. The completed question is:

A firm evaluates all of its projects by applying the IRR rule. The current proposed project has cash flows of -$27,048, $16,850, $15,700, and $4,300 for years 0 to 3, respectively. The required return is 19 percent. What is the project IRR? Should the project be accepted or rejected?

-16.05 percent; accept

-21.08 percent; reject

-18.30 percent; accept

-21.08 percent; accept

-16.05 percent; reject

The answer is: 21.08 percent; accept

Explanation:

The internal rate of return (IRR) is the discount rate that makes the net present value of a project equal to zero. The net present value(NPV) of a project is the discounted value of all future cash outflows. In this question IRR is calculated via the NPV as follows:

NPV = CF/(1+IRR)^t where t is the time period. Using the given percentage rates, we would carry out the following calculation for each year (year 0 to year 3) at each percentage rate given to determine which rate makes the NPV equal to zero.

Year 0 = - ($27, 048/(1 + 0.2108)^0) = - ($27, 048)

Year 1 =    ($16, 850/(1 + 0.2108)^1)   =  $13, 916.42

Year 2 =    ($15, 700/(1 + 0.2108)^2)  = $10, 709.15

Year 3 =     ($4, 300/(1 + 0.2108)^3)   = <u>$2, 422.43</u>

                                                               <u>        $0       </u>                  

The IRR of 21.08% exceeds the required return of 19% therefore the project is profitable and should be accepted. The IRR model does not take into account the cost of capital and it assumes that all cash flows over the life of the project are reinvested at the IRR.

Westkost [7]3 years ago
6 0

Answer: 21.08%

Explanation:

The IRR is the discount rate that equates the after tax cash flow to the amount invested.

Using the financial calculator to find the IRR;

Cash flow for year zero = -$27,048

Cash flow for year one = $16,850

Cash flow for year two = $15,700

Cash flow for your three = $4,300

IRR = 21.08%

I hope my answer helps you.

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Oilers, Inc. refines and markets its energy products in different nations around the world. In addition, Oilers' stockholders an
nasty-shy [4]

Answer:

D. expropriation.

Explanation:

Oilers, Inc. refines and markets its energy products in different nations around the world. In addition, Oilers' stockholders and managers come from many different nations. If some of the nations where it operates decided to take over the assets of the company, this act would constitute an <u>expropriation.</u>

Expropriation: It is an act of government for taking private property against the will of the owner for the benefit of the overall public by building roads, highways, flyovers, airports, etc. The owner is just compensated as per government policy. This is an act of getting Expropriated. In legal terms, it is an exercise of eminent domain power.    

4 0
3 years ago
You buy a share of The Ludwig Corporation stock for $21.70. You expect it to pay dividends of $1.00, $1.16, and $1.3456 in Years
Radda [10]

Answer:

21%

Explanation:

Given that,

Cost of share = $21.70

Expect to pay dividend in year 1 = $1.00

Expect to pay dividend in year 2 = $1.16

Expect to pay dividend in year 3 = $1.3456

Expected selling price of share at the end of year 3 = $28.15

Growth rate in Dividends:

= [(Dividend in Year 2 - Dividend in Year 1) ÷ Dividend in Year 1] × 100

= [($1.16 - $1.00) ÷ $1.00] × 100

= 0.16 × 100

= 16%

Expected dividend yield :

= (Dividend in year 1 ÷ Cost of Share ) × 100

= (1.00 ÷ $21.70) × 100

= 0.05 × 100

= 5%

Stock's expected total rate of return:

=  Expected Dividend Yield + Growth rate in Dividends

= 5% + 16%

= 21%

8 0
3 years ago
Between 1953 and 2015, rising labor productivity contributed more to U.S. economic growth than did increases in inputs.
kondor19780726 [428]

Answer: True

Explanation:

Labor productivity has to do with the amount of products and services which are produce at a particular time by the workers.

It should be noted that between 1953 and 2015, rising labor productivity contributed more to U.S. economic growth than did increases in inputs. This brought about increase in the available goods and services in the country.

3 0
3 years ago
What are the two methods used to translate financial statements and how does the functional currency play a role in determining
laiz [17]

Answer:

The two methods of translating financial statements are the current rate method/closing rate method and the temporal method

Explanation:

Functional currency simply means the main currency used by a business. it could also be defined as the primary currency used in the economic environment in which a business operates as in where it generates most of its cash and also spends it

Functional currency determines to a large extent the method used in translation of financial statements. When there is no difference between local currency and foreign currency, current rate method is used and vice versa for temporal rate method

please find attached from Advanced Accounting

Hoyle, J., Schaefer, T., & Doupnik, T. (2015)

8 0
3 years ago
MCO Leather manufactures leather purses. Each purse requires 3 pounds of direct materials at a cost of $4 per pound and 0.7 dire
sdas [7]

Answer:

Results are below.

Explanation:

Giving the following information:

Direct material:

Each purse requires 3 pounds of direct materials for $4 per pound.

The company’s policy is to end each month with direct materials inventory equal to 40% of the next month’s materials requirement.

At the end of August the company had 3,480 pounds of direct materials in inventory.

Direct labor:

0.7 direct labor hours at a rate of $17 per hour.

Overhead:

Variable manufacturing overhead is charged at a rate of $3 per direct labor hour.

Fixed manufacturing overhead is $13,000 per month. T

Production Budget:

September= 5,300 units

October= 6,900 units

November= 6,300 units

<u>1) Direct material budget:</u>

September (in pounds):

Production= 5,300*3= 15,900

Desired ending inventory= (6,900*3)*0.4= 8,280

Beginning inventory= (3,480)

Total pounds= 20,700

Total cost= 20,700*4= $82,800

October (in pounds):

Production= 6,900*3= 20,700

Desired ending inventory= (6,300*3)*0.4= 7,560

Beginning inventory= (8,280)

Total pounds= 19,980

Total cost= 19,980*4= $79,920

<u>2) Direct labor:</u>

September:

Total direct labor hours= 0.7*5,300= 3,710

Total cost= 3,710*17= $63,070

October:

Total direct labor hours= 0.7*6,900= 4,830

Total cost= 4,830*17= $82,110

<u>3) Manufacturing overhead:</u>

September:

Variable overhead= $3*3,710= $11,130

Fixed overhead= 13,000

Total overhead= $24,130

October:

Variable overhead= $3*4,830= $14,490

Fixed overhead= 13,000

Total overhead= $27,490

8 0
3 years ago
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