Answer:
15.54 %
Explanation:
The Internal Rate of Return (IRR) is the Interest rate that will make the present value of Cash Flows equal to the price or initial investment.
Step 1
First determine the summary of Cash Flow of the project.
The Projects` cash flows are as follows :
Year 0 = $1,920,000
Year 1 = $580,127.00
Year 2 = $580,127.00
Year 3 = $580,127.00
Year 4 = $580,127.00
Year 5 = $580,127.00
Step 2
Calculate the IRR.
From this point i will use a Financial Calculator. The Function to use is the CFj for uneven Cash Flows.
($1,920,000) CFj
$580,127.00 CFj
$580,127.00 CFj
$580,127.00 CFj
$580,127.00 CFj
$580,127.00 CFj
Shift IRR/YR 15.5415 or 15.54 %
Conclusion :
The internal rate of return for the J-Mix 2000 is 15.54 %
B. Rob is confusing the nominal rate of return with the real rate of return.
Nominal rate of return is the "face value" of returns, but the real rate of return factors in the negative effect that inflation has on buying power. Inflation takes away from any earnings because it reduces the value of money.
Answer:
C
Explanation:
In economics, when the word Marginal is mentioned, it refers to additional, as in one extra unit.
For example when we hear marginal revenue, it means the revenue gotten from selling an additional unit, when we hear or speak of marginal cost, it is the cost of producing or getting one more unit.
Propensity is a tendency, an inclination to do something.
So adding the three words together, marginal propensity to consume will be the tendency or inclination to consume one extra unit as a result of earning extra income.
Hence (MPC) is the fraction of extra income consumed.
I hope the concept is clearer.
Answer:
The Substitution Effect
Explanation:
Substitute goods are those goods which can be used as perfect replacement for one another to satisfy a want.
There is a direct relationship between price of a good and the demand of it's substitute. So when price of a good falls, the quantity demanded of it's substitute falls and vice versa keeping factors affecting demand other than price as constant.
Similarly, in the given case, Nike and Adidas soccer balls are perfect substitute products. So when price of Nike fell, its quantity demanded increased while the quantity demand for Adidas soccer balls reduced.
