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vekshin1
4 years ago
13

Carriage Inc., a steel manufacturing company, is planning to buy a new plant. The internal rate of return provided by the new pl

ant is 6%. The cost of capital for Carriage Inc. is 8%. Based on the given scenario, which of the following statements is true in the context of internal rate of return?a.Carriage Inc. should invest in the new plant because the project will earn more than zero IRR from the project.b.Carriage Inc. should not invest in the new plant because the IRR of the project is less than its cost of capital.c.Carriage Inc. should not invest in the new plant because IRR is not a reliable model for making capital investment decisions.d.Carriage Inc. should invest in the new plant because IRR is the true or actual simple rate of return that is earned by the initial investment.
Business
1 answer:
harina [27]4 years ago
5 0

Answer:

Carriage Inc. should not invest in the new plant because the IRR of the project is less than its cost of capital.

Explanation:

The investment should NOT be made in the new plant because its internal rate of return is lower than Carriage's cost of capital.

In simple language since the return (IRR) that will be gotten from the new plant is LOWER than the cost (cost of capital), then the company is not making a profit if it invests in this new plant.

Generally, as a decision rule, a company should only invest when the IRR is higher than (or equal to) its cost of capital.

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What is a turnkey operation? Group of answer choices A) the buying of another company B) a contract for a large construction pro
Artyom0805 [142]

Answer: Option B

                                                                         

Explanation: In simple words, turnkey operations refers to those projects which are related to the production of any good or service . These projects are intended to be sold or leased out once they are complete.

Thus, such kind of projects are usually made for the Govt. and after a long duration of completion the producer sells it to the govt.

Thus, the correct option is B

4 0
3 years ago
A disadvantage of the corporate form of business ownership is that:
Roman55 [17]

Answer:

b) most shareholders have little direct control over how the company is managed.

4 0
3 years ago
If the marginal propensity to consume (MPC) is 0.75, and if the goal is to increase real GDP by $400 million, then by how much w
mr Goodwill [35]

Answer:

Government spending would have to change by <u>$1.6 billion</u>

Explanation:

The marginal propensity to consume (MPC) refers to the proportion of an increase in aggregate income that is spent on consumption of commodities by a consumer.

Since from the question, we have:

MPC = Marginal propensity to consume = 0.75

The MPC can therefore be used to calculate the fiscal multiplier which measures the effect of government spending on real GDP as follows:

Fiscal multiplier = 1 / (1 - MPC) = 1 / (1 - 0.75) = 1 / 0.25 = 4.0

Therefore, we have:

Change in government spending = Fiscal multiplier * Amount of targeted increase real GDP = 4.0 * $400 million = $1.6 billion

Therefore, government spending would have to change by <u>$1.6 billion</u> to generate $400 million increase in real GDP.

6 0
4 years ago
In the cycle of complete strategic planning, taking corrective action is a part of ________. A. implementation B. controlling C.
slavikrds [6]

Answer:

The correct answer is letter "B": controlling.

Explanation:

In strategic planning, controlling is the step in which the project is being carried out but monitoring is needed to track the progress of work. Controlling will allow the company to find out if it is ahead or behind the scheduled plan and if there are corrections to be made or simple adjustments.

8 0
3 years ago
You are planning a special wedding three years from today. You don't know who your spouse will be but you do know that you are s
Novay_Z [31]

Answer:

Total amount collected = $94,400

Explanation:

Given:

1st investment = $25,000

2nd Investment = $35,000

3rd investment = $45,000

Computation of total amount:

Total\ amount = \frac{25,000}{1} +\frac{35,000}{(1+r)^1} +\frac{45,000}{(1+r)^3} \\\\Total\ amount = \frac{25,000}{1} +\frac{35,000}{(1+0.07)^1} +\frac{45,000}{(1+0.07)^3} \\\\Total\ amount = \frac{25,000}{1} +\frac{35,000}{(1.07)^1} +\frac{45,000}{(1.07)^3} \\\\Total\ amount = \frac{25,000}{1} +\frac{35,000}{(1.07)} +\frac{45,000}{(1.2250)} \\\\Total\ amount = 25,000 +32,710.28 +36,734.6939 \\\\Total\ amount = 94,444 \\\\

Total amount collected = $94,400

3 0
4 years ago
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