Answer:
(a) What is the net present value of this potential investment?
Net present value of Investment is $(3,903)
(b) Should you invest in this machine?
We should not invest in this investment because Net present value of this investment is negative by discounting Minimum acceptable rate of return.
Explanation:
Present Values:
Revenue $144,146
O&M Cost ($48,049)
Initial Investment <u>$(100,000)</u>
Net Present value $(3,903)
Working :
Present Value Calculation = P x ( (1- ( 1 + r )^-10) / r
Revenue = $21,000 x ( (1- ( 1 + 0.075 )^-10) / 0.075 = 144,146
O&M Costs = $7,000 x ( (1- ( 1 + 0.075 )^-10) / 0.075 = 48,049
Answer:
The concept of equivalence, also known as economic equivalence, describes the reduction of a series of cash inflows (benefits) and cash outflows (costs) to a single point in time, using a single interest rate, which enables the cash flows to be compared or equated. This implies that while the amounts and timing of the cash flows (both inflows and outflows) may differ, an appropriate interest rate, factoring in the time value of money, will cause one set to be equal to the other. Therefore, to establish economic equivalence, series of cash flows that occur at different points in time must be equalized using a single interest rate through present value calculations.
Explanation:
The concept of equivalence describes a combination of a single interest rate and the idea of the time value of money. This combination helps to determine the different amounts of money at different points in time that are equal in economic value, such that a person would not hesitate to trade one for the other.
For example, if the interest rate is 10% in Year 1 and in Year 2 and you are to be paid $1,000 in Year 1, it will not make any difference to you if you are paid $1,100 in Year 2. This is because, given the prevailing interest rate of 10%, the value you receive in Year 1 and Year 2 are equivalent.
Giana who is in charge of training and mentoring the firm’s staff is a:
<h3>Who is a Principal Broker?</h3>
A principal broker is found in many real estate offices. The role of these brokers is to ensure that all the staff and their methods of engagement are in agreement with the proscribed laws of the nation and state.
Since Giana has to train and mentor the firm's staff to conform to agreed standards, she can be referred to as a Principal Broker.
Learn more about Principal Brokers here:
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Answer: Increase
Explanation:
According to the Law of Supply and Demand, If the demand for the good is higher than the supply, the price will be higher to reflect the relative scarcity and if the demand is lower than supply, the price will be lower to reflect the relative excess.
In this case the quantity demanded is higher than the quantity supplied so the price will have to increase to reflect the relative scarcity of the good.
Answer:
Explanation:
In the income statement, the total revenues and the total expenses are recorded.
If the total revenues are more than the total expenditure then the company earns net income
And, If the total revenues are less than the total expenditure then the company have a net loss
This net income or net loss would reflect in the statement of the retained earning account.
The net sales would be = Sales revenue - sales discount - sales return and allowances
= $39,000 - $1,950 - $1,755
= $35,295
The preparation of the income statement is presented in the spreadsheet. Kindly find the attachment below: