Answer:
$147,000
Explanation:
Data given
Capital expenditure = $25,000
Opportunity cost = $117,000
Increase in net working capital = $5,000
The computation of initial cash flow is shown below:-
Free cash flow = Capital expenditure + Opportunity cost + Increase in net working capital
= $25,000 + $117,000 + $5,000
= $147,000
Therefore for computing the free cash flow we simply applied the above formula.
Answer:
Option (A) is correct.
Explanation:
Accounting rate of return is determined to take the efficient business decision related to the capital budgeting and it tell us whether to accept the proposal or not. The following is the formula:
Accounting rate of return = (Average Income ÷ Initial Investment)
For example:
Net profit for 3 years are as follows:
2012 - 13 = $50 million
2013-14 = $100 million
2014-15 = $150 million
Initial investment = $200
Average profit = ($50 + $100 + $150) ÷ 3
= $100
Accounting rate of return = (Average Income ÷ Initial Investment)
= $100 ÷ $200
= 0.5 or 50%
The answer is<u> "depreciation allowances and tax credits."</u>
Depreciation allowance refers to a sum that can be removed a business' benefit figure while ascertaining charge, to take into account the way that an advantage has lost piece of its incentive amid a specific time frame.
An tax credit is a measure of cash that citizens can subtract from charges owed to their legislature. The estimation of a tax credit relies upon the idea of the credit; certain sorts of expense credits are conceded to people or organizations in particular areas, orders or ventures.
The example of ownership capital is : Shares
Shares determine that you have a part of percentage of the company (you will also get part of its income)
Example of Borrowed capital is : Leasing.
Leasing is a rental agreement in which you can borrow goods that you can use for your production process
hope this helps
Answer:
the real return is 2.99%
Explanation:
The computation of the real return on long term government bond is shown below:
As we know that
Real rate of return is = [(1 + nominal rate) ÷ (1+inflation rate)] - 1
= [(1 + 0.069) ÷ (1 + 0.038)] - 1
= 2.99%
hence, the real return is 2.99%
We simply applied the above formula so that the correct value could come
And, the same is to be considered
