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Fudgin [204]
3 years ago
10

Mason Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternat

ive is $160,000 and $114,000, respectively. The present value of cash inflows and outflows for the second alternative is $335,000 and $280,000, respectively.
Required

Calculate the net present value of each investment opportunity. (Negative amounts should be indicated by a minus sign.)

Calculate the present value index for each investment opportunity. (Round "PVI" to 2 decimal places.)

Indicate which investment will produce the higher rate of return.
Business
1 answer:
STatiana [176]3 years ago
7 0

Answer:

The net present values of the two investments are $46000 and $55000 respectively .

However, the present value index for the first investment is 1.40 while the second investment has 1.2 as net present value index.

Judging from net present value,the the second investment is preferable,but since net present value is an absolute value,it does not  relate the net present value to the underlying outlay,the first investment is preferred based on present value of index 1.4

Explanation:

The net present value for both alternatives is shown below:

                                                         $                               $

Present value of cash inflows         160000                335000

Present value of cash inflows         (114000)               (280000)

Net present value                             46000                  55000

Present value index=present value of inflows/present value of outflows

First investment       =160000/114000=1.40

Second investment =335000/280000=1.2

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Snap Dragon Photo reported the following figures on its December 31, 2016, income statement and balance sheet:Net Sales $440,000
siniylev [52]

Answer:

Assets turnover ratio= 1.64 times

Explanation:

The asset turnover is the he amount of sales generated by one dollar invested in asset. it measures how efficient the business is in generating sales using assets

Assets turnover ratio = net sales / Average assets

<em>Asset at the beginning of year 2016</em>

=26,000  + 56,000 +    79,000 +     8,000  + 180,000 = 349 ,000

<em>Asset at the end of year 2016</em>

$28,000  + 58,000 +    76,000  +  14,000 +  11,000= 187 ,000

Average assets = Opening value of asset+ closing value of assets/2

= 349 ,000 + 187 ,000= 268 ,000

Assets turnover ratio = net sales / Average assets

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Assets turnover ratio= 1.64 times

Total assets =

3 0
3 years ago
An increase in government spending raises income: a. and the interest rate in the short run, but leaves both unchanged in the lo
Elina [12.6K]

An increase in government spending raises income (B) in the short run, but leaves it unchanged in the long run, while lowering investment.

<h3>What is government spending?</h3>
  • All government purchases, investments, and transfer payments are included in what is known as government spending or expenditure.
  • Government final consumption spending is defined in national income accounting as the purchase by governments of goods and services for immediate consumption, to primarily meet the individual or collective needs of the community.
  • Government investment is defined as the purchase of goods and services by the government with the intention of generating future benefits, such as infrastructure investment or research spending (government gross capital formation).
  • Together, these two categories of government spending—on final consumption and gross capital formation—make up one of the primary parts of the GDP.

Therefore, an increase in government spending raises income (B) in the short run, but leaves it unchanged in the long run, while lowering investment.

Know more about investments here:

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4 0
2 years ago
Assume that the full-employment level of output is $2,000 and the price level associated with full-employment output is 100. Als
mariarad [96]

Answer:

MPC = 0.4

Explanation:

Multiplier shows change in income due to change (increase) in investment, or change (decrease) in tax. It is calculated by Marginal Propensity to Consume, as follows -

Multiplier ie k = Δ Income / Δ (govt investment or tax) = 1 / (1 - MPC)

Given : ΔG  ie tax fall = 60 ; Targeted income rise = Full employment - actual output = 2000 - 1900 = 100

k = ΔY / ΔG = 100 / 60 = 1.67

k = 1 / (1 - MPC) → 1 - MPC = 1 / k → 1 - MPC = 1 / 1.67 → 1 - MPC = 0.6

MPC = 1 - 0.6 → MPC = 0.4

8 0
2 years ago
A company’s production budget requires the following units of a single product for the upcoming year: 1st quarter 60,000 units 2
maks197457 [2]

Answer:

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Explanation:

A Purchase Budget is required to determine the quantities and cost of purchases required for use in production.

Materials Purchase Budget for Second Quarter (Pounds)

Budgeted Production Materials (80,000 x 2)                    160,000

Add Budgeted Closing Materials (90,000 x 2 x 25%)        45,000

Total Materials                                                                     205,000

Less Budgeted Opening Materials (80,000 x 2 x 25%)    (40,000)

Budgeted Material Purchase (pounds)                               165,000

Therefore,

Budgeted purchases of material for the second quarter would be 165,000 pounds

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Answer:

The answer is "87%".

Explanation:

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