(NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time.
NPV is used in capital budgeting and investment planning to analyze the profitability of a projected investment or project.
<h3>Is a high or low NPV better?</h3>
When comparing similar investments, a higher NPV is better than a lower one.
When comparing investments of different amounts or over different periods, the size of the NPV is less important since NPV is expressed as a dollar amount and the more you invest or the longer, the higher the NPV is likely to be.
<h3>What is NPV example?</h3>
The net present value is the difference between the present value of future cash inflow and the present value of cash outflow over a period of time.
NPV is widely used in capital budgeting. It is essential because capital expenditure requires a considerable amount of funds.
Learn more about NPV here:
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brainly.com/question/17185385</h3><h3 /><h3>#SPJ4</h3>
Complete Question is as under:
JJ Manufacturing builds and sells switch harnesses for glove boxes. The sales price and variable cost for each follow:
PRODUCTS Selling Price Per Unit Variable Cost Per Unit
TRUNK SWITCH $60 $28
GAS DOOR SWITCH $75 $33
GLOVE BOX LIGHT $40 $22
Their sales mix is reflected in the ratio 4:4:1. If annual fixed costs shared by the three products are 18,840.
Requirement 1: How many units of each product will need to be sold in order for JJ to break even?
Requirement 2: Use the information from the previous exercises involving JJ Manufacturing to determine their break-even point in sales dollars.
Kindly Find the Solution in the attachment.
E. Making your money grow.
Budgeting can make it seem like you have more money sometimes because you probably aren’t spending it on as many things that you don’t need, but it doesn’t actually grow your finances.
Budgeting is setting out certain amounts of money for different parts of your life. For example, you get to spend $200 on food each month, and $50 on things you want, etc.
Answer:
$929 approx
Explanation:
<u>Assumption</u>: <u>Since face value of the bond is not provided, it has been assumed to be $1000 and solved accordingly.</u>
The present value of a bond i.e bond price is the sum total of the present value of it's future coupon payments in addition to redemption value, both discounted at yield to maturity rate. It is expressed as
![B_{0} = \frac{C}{(1\ +\ YTM)^{1} } \ +\ \frac{C}{(1\ +\ YTM)^{2} } \ +.....+\ \frac{C}{(1\ +\ YTM)^{n} } \ +\ \frac{RV}{(1\ + YTM)^{n} }](https://tex.z-dn.net/?f=B_%7B0%7D%20%20%3D%20%5Cfrac%7BC%7D%7B%281%5C%20%2B%5C%20YTM%29%5E%7B1%7D%20%7D%20%5C%20%2B%5C%20%5Cfrac%7BC%7D%7B%281%5C%20%2B%5C%20YTM%29%5E%7B2%7D%20%7D%20%5C%20%2B.....%2B%5C%20%5Cfrac%7BC%7D%7B%281%5C%20%2B%5C%20YTM%29%5E%7Bn%7D%20%7D%20%5C%20%2B%5C%20%5Cfrac%7BRV%7D%7B%281%5C%20%2B%20YTM%29%5E%7Bn%7D%20%7D)
where,
= Present Value of the bond
C = Annual coupon payment
YTM = Yield to maturity rate
n = No of years to maturity.
Here, C = $55 (assumed par value of each bond as $1000)
YTM = 7.25% per annum
n = 5 years
Putting these values in above equation, we get,
![B_{0} = \frac{55}{(1\ +\ .0725)^{1} } \ +\ \frac{55}{(1\ +\ .0725)^{2} } \ +.....+\ \frac{55}{(1\ +\ .0725)^{5} } \ +\ \frac{1000}{(1\ + .0725)^{5} }](https://tex.z-dn.net/?f=B_%7B0%7D%20%20%3D%20%5Cfrac%7B55%7D%7B%281%5C%20%2B%5C%20.0725%29%5E%7B1%7D%20%7D%20%5C%20%2B%5C%20%5Cfrac%7B55%7D%7B%281%5C%20%2B%5C%20.0725%29%5E%7B2%7D%20%7D%20%5C%20%2B.....%2B%5C%20%5Cfrac%7B55%7D%7B%281%5C%20%2B%5C%20.0725%29%5E%7B5%7D%20%7D%20%5C%20%2B%5C%20%5Cfrac%7B1000%7D%7B%281%5C%20%2B%20.0725%29%5E%7B5%7D%20%7D)
Hence, 4.073 × 55 + 1000 × 0.7047
= $929 approx
Hence, Pierre should pay less than it's face value for such a bond.