Answer:
The maximum amount that the firm should invest in the project $695,603.10
Explanation:
The applicable formula in this scenario is the present value of an ordinary annuity,modified for timing of the cash flows,which is given below:
PV=A*(1-(1+r)^-N)/r
PV is the unknown
A is the periodic inflow of $10,000
r is the rate of return of 12.05% divided by 12 months i.e 12.05%/12=0.010041667
N is the number of years multiplied by 12 months i,e 10*12=120
PV=10000
annuity factor=(1-(1+r)^-N)/r
annuity factor=1-(1+0.010041667
)^-120/0.010041667
annuity factor=(1-0.301498531
)/0.010041667
annuity factor=69.56030996
PV=69.56030996
*10000
PV=$695,603.10
Answer: B. is not a true statement. Most of the time monopolies do NOT benefit social welfare, they often put social welfare at a disadvantage.
<u>Calculation of Return on Equity:</u>
Return on Equity can be calculated using the following formula:
Return on Equity = Net Income / Equity
We can calculate net income using the following formula:
Net Income = Sales * Profit Margin = 3650*5% = $182.50
And we can calculate Equity using the following formula:
Equity = Total Assets * (1-Total Debt ratio) = 3350*(1-41%) = $1976.50
Now Finally,
Return on Equity = Net Income / Equity = 182.50 / 1976.50 = 9.23%
Hence the return on equity is <u>9.23%</u>
Answer:
$820,000
Explanation:
The computation of the firm's levered value is shown below:
Value of levered firm = Value of unlevered firm + Debt × tax -PV (financial distress)
Value of levered firm = $800,000 + $200000 × 35% - $800,0000 × (25%)^2
= $820,000
The 25% is come from
= $200,000 ÷ $800,000
= 25%
We simply applied the above formula to determine the levered value
Answer: A
Explanation:
The one that is clearly out of place would be A
