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jarptica [38.1K]
3 years ago
5

Suppose you are evaluating two mutually exclusive projects, A and B. Project A costs $350 and has cash flows of $250 and $250 in

the next 2 years, respectively. B costs $300 and generates cash flows of $300 and $100. What is the crossover rate for these projects
Business
1 answer:
ki77a [65]3 years ago
5 0

Answer:

The answer is 30%

Explanation:

Solution

Given that:

Project A

Project A costs = $350

Cash flows =$250 and $250 (next 2 years)

Project B

Project B costs =$300

Cash flow = $300 and  $100

Now what is the crossover rate for these projects.

Thus

Year Project A    Project B A-B        B-A

0            -350     -300        -50        50

1             250      300        -50        50

2             250      100         150       -150

IRR         27%      26%         30%      30%

So,

CF = CF1/(1+r)^1 + CF2/(1+r)^2

$-50 = $-50/(1+r)^1 + $150/(1+r)^2

r = 30%

CF = CF1/(1+r)^1 + CF2/(1+r)^2

$50 = $50/(1+r)^1 + $-150/(1+r)^2

r = 30%

Hence, the cross over rate for these project is 30%

Note:

IRR =Internal rate of return

CF =Cash flow

r = rate

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FIllmore Company began operations on Sept. 1 by purchasing $4,400 of inventory and $750 of cleaning supplies. During the month,
jarptica [38.1K]

Answer: $3,400

Explanation:

Gross Profit = Sales revenue - Cost of Goods sold

Cost of good sold = Opening stock + Purchases of inventory - Closing stock of inventory

= 0 + 4,400 - 1,800

= $2,600

Gross Profit = 6,000 - 2,600

= $3,400

5 0
2 years ago
A couple will retire in 50 years; they plan to spend about $22,000 a year in retirement, which should last about 25 years. They
Serga [27]

Answer:

Annual deposit= $2,803.09

Explanation:

<u>First, we need to calculate the monetary value at retirement:</u>

FV= {A*[(1+i)^n-1]}/i

A= annual payment

FV= {22,000*[(1.08^25) - 1]} / 0.08

FV= $1,608,330.68

Now, the annual deposit required to reach $1,608,330.68:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

Isolating A:

A= (FV*i)/{[(1+i)^n]-1}

A= (1,608,330.68*0.08) / [(1.08^50) - 1]

A= $2,803.09

3 0
2 years ago
Janet Foster bought a computer and printer at Computerland. The printer had a $900 list price with a $100 trade discount and 2/1
nikdorinn [45]

Answer:

Janet Foster

a. Janet could save $12.44 on the printer by borrowing $800 to take advantage of the cash discount.

b. On the computer, the difference in the final payment between choices 1 and 2 is $197.

It is advisable for Janet to choose the first option.

Explanation:

a) Data and Calculations:

Printer:

List price of printer = $900

Trade discount =          100

Purchase cost =        $800

Cash discount terms = 2/10, n/30

Cash discount = $16 ($800 * 2%)

Interest on loan to purchase printer = $3.56 ($800 * 8% * 20/360)

Savings if loan is borrowed = $12.44 ($16 - $3.56)

Computer:

List price = $4,060

Trade discount = 25% or $1,015 ($4,060 * 25%)

Purchase cost = $3,045

Payment options:

1) = $160 * 17 months = $2,720

Balance on 18th month    325

Total payment =           $3,045

2) = Payment with 8% interest for 18 months equal payment = $180.08

From an online financial calculator:

N (# of periods)  18

I/Y (Interest per year)  8

PV (Present Value)   $3,045

FV (Future Value)  0

P/Y (# of periods per year)  12

C/Y (# of times interest compound per year)  12

PMT made at the end of each period

Results

PMT = $180.08

Sum of all periodic payments $3,241.48

Total Interest $196.48

Difference in final payment:

Choice 1 , total payment =    $3,045

Choice 2, total payment =    $3,242

Difference in final payment = $197

6 0
2 years ago
Ashton borrows $25,000 from Amanda, who lends the money without taking an interest in collateral for the loan. Amanda is relying
polet [3.4K]

Amanda is kind of an unsecured creditor.

<h3>What Is an Unsecured Creditor?</h3>

An unsecured creditor is an individual or institution that lends money without obtaining specified assets as collateral. This poses a higher risk to the creditor because it will have nothing to fall back on should the borrower default on the loan.

If a borrower fails to make a payment on a debt that is unsecured, the creditor cannot take any of the borrower's assets without winning a lawsuit first.

In other word, An unsecured creditor is a creditor other than a preferential creditor that does not have the benefit of any security interests in the assets of the debtor.

Therefore, we can conclude tat the correct option is A. Amanda is kind of an unsecured creditor.

Your question is incomplete, but most probably your full question was:

Ashton borrows $25,000 from Amanda, who lends the money without taking an interest in collateral for the loan. Amanda is relying on Ashton's credit standing when she made the loan. In this case, what kind of creditor is Amanda?

A) an unsecured creditor

B) a secured creditor

C) an administrative claim creditor

D) a post-petition creditor

Learn more about Unsecured Creditor on:

brainly.com/question/2872411

#SPJ4

3 0
1 year ago
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Answer:

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2 years ago
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