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8_murik_8 [283]
3 years ago
8

Incremental costs - Initial and terminal cash flow

Business
1 answer:
Anvisha [2.4K]3 years ago
3 0

Answer:

1. $3,780,000

2. $4,212,000

3. Option (C) is correct.

Explanation:

1. Total cost of Newcastle's new equipment:

= Cost of new equipment + Additional cost of shipping and installation

= $3,600,000 + $180,000

= $3,780,000

2. Newcastle's initial investment outlay:

= Total cost of new equipment + Net increase in working capital

= Total cost of new equipment + (Current assets - current liabilities)

= $3,780,000 + ($720,000 - $288,000)

= $3,780,000 + $432,000

= $4,212,000

3. Project's total termination cash flow:

= Expected sale value fro equipment - Taxes 40 % + Recovery of net working capital

= $600,000 - $240,000 + $432,000

= $792,000

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If Good C increases in price by 30% a pound.

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What is the cross-price elasticity of the two goods ?

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We can find the cross-price elasticity of the two goods by this formula:

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