Answer:
What does the IRR rule say about whether you should accept this opportunity?
The IRR rule basically states that if the project's internal rate of return (IRR) is higher than the cost of capital (discount rate or WACC), then the project should be accepted. In this case, we are not given the company's WACC or any discount rate we can use, therefore there is nothing to compare the project's IRR against.
Based on prior experience, this project's IRR will not be very high and if we consider the cost of keeping the site clean forever, I really doubt that the project is profitable. If you calculate the project's IRR without including the perpetual cleaning cost, IRR = 11%.
If we assume any of the 3 WACCs I used as an example below, the project's IRR including cleaning costs:
- if WACC = 12%, then IRR = 9.26% REJECTED
- if WACC = 10%, then IRR = 8.98% REJECTED
- if WACC = 9%, then IRR = 8.79% REJECTED
- if WACC = 8%, then IRR = 8.54% ACCEPTED
In order for this project to be profitable, the WACC would need to be very low (around 8% or less).
Explanation:
cost of opening a new mine $120 million
annual cash flow $20 million
expected cleaning costs $2 per year in perpetuity
the cost of keeping the site clean forever = $2 million / discount rate or WACC:
- if WACC = 12%, then perpetual cost = $16.67 million
- if WACC = 10%, then perpetual cost = $20 million
- if WACC = 9%, then perpetual cost = $22.22 million
- if WACC = 8%, then perpetual cost = $25 million
I'm not sure about this one. Are you talking about like this year?
Answer: (E) Union shop
Explanation:
The union shop arrangement is refers to the process in which we require the number of workers for join and also participate in the specific union and it is also called as the post entry or the closed shop.
The workers or the union representatives also providing the various types of benefits in the specific time period. Depending on the different protection level the trade unions are varying nation to nations.
According to the given question, the Neal's human resource manager is basically referring to the union ship that is related to the union membership.
Therefore, Option (E) is correct answer.
Answer:
The overall cost of buying a market basket of goods and services by a typical customer.
Explanation:
The question is incomplete, but I figured that the question is trying to find out the correct meaning of CPI with different options provided. The correct question should be:
<em>The CPI is a measure of </em>
- <em>the overall cost of goods and services produced in the economy </em>
- <em>the overall cost of inputs purchased by a typical producer </em>
- <em>the overall cost of buying a market basket of goods and services by a typical consumer </em>
- <em>the overall cost of stocks on the New York Stock Exchange</em>
<em>Which option is correct?</em>
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CPI or Consumer Price Index evaluates the average prices of a basket of consumer goods and services, for instance, medical care, food, and transportation. It is evaluated by analyzing the changes in and averaging the price of each item in the basket of consumer goods and services.
The CPI is usually used especially to discover situations of inflation of deflation.
