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Helga [31]
3 years ago
6

LO 3 Chad's Chocolates is considering the purchase of a new candy press. The machine under consideration costs $17,550 and would

generate $2,650 in annual savings of direct labor costs over its 20-year life. At the end of 20 years, the press could be sold for $500. Chad's required rate of return is 16%. What is the machine's net present value?
A) $1,813
B) $(1,813)
C) $(1,839)
D) $(1,339)
Business
1 answer:
devlian [24]3 years ago
4 0

Answer:

B) $(1,813)

Explanation:

Initial investment = 17,550

Annual cashflows = 2,650

Terminal Cashflow = 500

You can solve for NPV using financial calculator with the following inputs;

CF0= -17,550

C01 = 2,650

F01 (Frequency) = 19

C02 = 2,650 + 500 = 3,150

I=16%

Net present value; NPV = -1,812.879 or -1,813 rounded off to the nearest whole number.

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Beranek Corp has $720,000 of assets (which equal total invested capital), and it uses no debt—it is financed only with common eq
lozanna [386]

Answer:

firm must borrow $288000 to achieve the target debt ratio

Explanation:

given data

assets = $720,000

debt to total capital ratio = 40%

to find out

How much must the firm borrow to achieve the target debt ratio

solution

we get here debt here by Debt to Total capital ratio that is express as

Debt to Total capital ratio = Debt ÷ (  Debt + Equity  )   ....................1

put here value we get debt

0.40 = \frac{debt}{720000}

debt = $288000

so firm must borrow $288000 to achieve the target debt ratio

7 0
3 years ago
McQuilkin and Copan adopt different positions toward capitalism and socialism. Which author is more favorable to free market cap
Nimfa-mama [501]

Answer:

Paul Copan

Explanation:

Dr. Robertson McQuilkin can be considered a very biblical man, and as such, would always favor socialism more than free market capitalism. His phrase "Capitalism is for freedom, socialism is for equality" and the fact that he believed in a strict following of the Bible, you make him a more socialist person.

Dr. Paul Copan is also a very religious man, but his views are less extreme than Dr. McQuilkin's. He is more pragmatic and argues in favor of religion from a more neutral or agnostic point of view. He even argues that religious beliefs and economics are not mutually exclusive.

8 0
3 years ago
If you were using the discounted cash flow method to determine the appropriate value of a security, you would want to purchase t
saul85 [17]

Answer: The current market price is below the PV

Explanation:

The discounted cash flow method is when the time value of money is being used to value a project, security, company, or an asset.

When the discounted cash flow method is used to determine the appropriate value of a security, it is vital to buy the security when the current market price is below the present value.

8 0
3 years ago
National Home Rentals has a beta of 1.06, a stock price of $17, and recently paid an annual dividend of $.92 a share. The divide
ANEK [815]

Answer:

9.6845%

Explanation:

Market risk premium = Market return - Risk free rate

                             7.3 = 11.2 - Risk free rate

Risk free rate = 3.9%

(1) Use CAPM:

Cost of equity = Risk free rate + Beta × Market risk premium

                        = 3.9% + 1.06(7.3)

                        = 11.638%

(2) Use DDM :

Stock price = [Latest dividend × (1 + dividend growth rate)] ÷ (Cost of equity-dividend growth rate)

$17 = [0.92 (1 + 0.022)] ÷ (Cost of equity - 0.022)

Cost of equity = 7.731%

Cost of equity = average value from using DDM and CAPM

Cost of equity = 0.5 (7.731 + 11.638)

                        = 9.6845%

4 0
3 years ago
While in India you purchased a hat for $15 U.S. How many rupees would you have to pay if each rupee was .032 U.S. dollars? 48 ru
slamgirl [31]

Answer:

468.75 rupees

6 0
3 years ago
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