Answer:
Explanation:
1. The formula to compute the profitability index is shown below:
Profitability index = Net present value ÷ investment required
For Proposal A, it would be
= $331,300 ÷ $790,000
= 0.42
For Proposal B, it would be
= $48,300 ÷ $120,000
= 0.40
For Proposal C, it would be
= $62,000 ÷ $120,000
= 0.52
For Proposal D, it would be
= $607,200 ÷ $1,820,000
= 0.33
2. The proposal rank preference is shown below:
Proposal Profitability index Rank
A 0.42 Second
B 0.40 Third
C 0.52 First
D 0.33 fourth
So, it would be C, A, B and D
Why is that if like to help:)
Answer:
The correct answer is B. Decrease and transfer payments increase.
Explanation:
Automatic stabilizers soften cyclic fluctuations through their effect on aggregate demand. Indeed, when the economy is in a contractive or recessive phase, the negative or very reduced economic growth generates a decrease in fiscal revenues while higher unemployment increases public expenditures. Consequently, private sector disposable income decreases less than GDP does, thus limiting the contractual effect on aggregate demand, growth and employment. Therefore, the budget balance worsens in this phase by stimulating the economy and facilitating economic recovery. In the opposite sense, in times of expansion, automatic stabilizers generate higher public revenues and lower spending, which allows to increase the public surplus - or reduce the deficit - avoiding excessive expansion that could have negative effects on cycle volatility and price stability.
Answer:
14%
Explanation:
required rate of return = risk free rate of return + ( risk premium x beta)
5% + 1.5 x 6% = 14%
Answer:
I. Capital expenditures
III. Taxes
IV. Working capital requirements
Explanation:
Free cash flow = EBIT*(1 - tax rate) + depreciation - changes in net working capital - capital expenditure