Answer:
$37,000,000
Explanation:
When you are preparing a statement of cash flows, you start with net income and then make all necessary adjustments that include any changes in accounts receivables.
Cash flow from operating activities:
Net income $66,000,000
Adjustments to net income:
Increase in accounts receivable <u>($29,000,000)</u>
Net cash flows from operating activities $37,000,000
Answer:
c. consistent with the cost-benefit model because most people intuitively weigh costs and benefits
Explanation:
People weight the cost and benefit before making desitions Some times without noticing they are doing it.
Also is important to notice intuition takes a role when there are shades in the information, the effect on the personnel and when not all information is available.
Answer: income statement and the statement of cash flows
Explanation:
Answer and Explanation:
The computation is shown below;
For Alternative A
Cost to buy new machine -$119,000.00
Cash received $55,000.00
Reduction in variable manufacturing cost ($33400 - $23000) ×5 $52,000.00
Total change in net income -$12,000.00
For Alternative B
Cost to buy new machine -$112,000.00
Cash received $55,000.00
Reduction in variable manufacturing cost ($33400 - $10200) × 5 $116,000.00
Total change in net income $59,000.00
So here Xinhong should purchase a machine that belong from Alternative B.
<span>Topics Reference Advisors Markets Simulator Academy</span> Profitability Index<span>By Investopedia</span><span> SHARE </span><span> </span><span> Chapter One Chapter Two Chapter Three Chapter Four Chapter Five </span><span>Chapter One Chapter Two Chapter Three Chapter Four Chapter Five</span><span><span>4.1 Net Present Value And Internal Rate Of Return4.2 Capital Investment Decisions4.3 Project Analysis And Valuation4.4 Capital Market History4.5 Return, Risk And The Security Market Line</span><span>4.1.1 Introduction To Net Present Value And Internal Rate Of Return4.1.2 Net Present Value4.1.3 Payback Rule4.1.4 Average Accounting Return4.1.5 Internal Rate Of Return4.1.6 Advantages And Disadvantages Of NPV and IRR4.1.7 Profitability Index4.1.8 Capital Budgeting</span></span>
A profitability index attempts to identify the relationship between the costs and benefits of a proposed project. The profitability index is calculated by dividing the present value of the project's future cash flows by the initial investment. A PI greater than 1.0 indicates that profitability is positive, while a PI of less than 1.0 indicates that the project will lose money. As values on the profitability index increase, so does the financial attractiveness of the proposed project.
The PI ratio is calculated as follows:
<span>PV of Future Cash Flows
</span>Initial Investment
A ratio of 1.0 is logically the lowest acceptable measure for the index. Any value lower than 1.0 would indicate that the project's PV is less than the initial investment, and the project should be rejected or abandoned. The profitability index rule states that the ratio must be greater than 1.0 for the project to proceed.
For example, a project with an initial investment of $1 million and present value of future cash flows of $1.2 million would have a profitability index of 1.2. Based on the profitability index rule, the project would proceed. Essentially, the PI tells us how much value we receive per dollar invested. In this example, each dollar invested yields $1.20.
The profitability index rule is a variation of the net present value (NPV) rule. In general, if NPV is positive, the profitability index would be greater than 1; if NPV is negative, the profitability index would be below 1. Thus, calculations of PI and NPV would both lead to the same decision regarding whether to proceed with or abandon a project.
However, the profitability index differs from NPV in one important respect: being a ratio, it ignores the scale of investment and provides no indication of the size of the actual cash flows.
The PI can also be thought of as turning a project's NPV into a percentage rate.
(Find some profitable ideas in <span>8 Ways To Make Money With Real Estate</span> and Outside The Box Ways To Get Money.)
