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Naddika [18.5K]
3 years ago
10

A company is contemplating investing in a new piece of manufacturing machinery. The amount to be invested is $100,000. The prese

nt value of the future cash flows at the company's desired rate of return is $100,000. The IRR on the project is 12%. Which of the following statements is true?
a.The desired rate of return used to calculate the present value of the future cash flows is less than 12%.
b.The desired rate of return used to calculate the present value of the future cash flows is equal to 12%.
c.The desired rate of return used to calculate the present value of the future cash flows is more than 12%.
d.The project should not be accepted because the net present value is negative.
Business
1 answer:
kompoz [17]3 years ago
5 0

Answer:

b.The desired rate of return used to calculate the present value of the future cash flows is equal to 12%.

Explanation:

Net present value method: In this method, the initial investment is subtracted from the discounted present value cash inflows. If the amount comes in positive than the project is beneficial for the company otherwise not.

Internal rate of return: It is that rate at which the net present value is equal to zero that means the initial investment and the present value of the future cash flows are equal

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mars1129 [50]

Answer:

The holding period return is 8%

Explanation:

In this question we need to find the holding period return for the stock, and for that we would need to know what is the stocks current price, what would the stocks price be in one year and how much dividend it will pay during the year. Their last dividend paid was $4 and their dividend is expected to grow at 5% in the future so the dividend paid in the current year would be 4*1.05= 4.2.

To find the current price of the stock we will use the DDM formula

DDM= D*(1+G)/R-G

(4*1.05)/(0.08-0.05)

Price = 140

Now we need to know what the stocks price would be in one year. For that we need to know the previous dividend which is 4.20, the growth rate which is 5% and the required rate of return which is 8%

DDM= (D*(1+G)/R-G

4.2*1.05/0.08-0.05

Price = 147

So now we know the current price, current year dividend and year end price we can calculate the holding period return.

Holding period return = (Dividend +(End of period price-Initial Price))/Initial Price

Dividend = 4.20

End Period Price = 147

Initial Price = 140

Holding period return = 4.20+(147-140)/140

=11.20/140

=0.08

=8%

5 0
3 years ago
Pearl E. White Orthodontist specializes in correcting misaligned teeth. During 2021, Pearl provides services on account of $589,
iren [92.7K]

Answer:

Estimated Allowance for Uncollectible Accounts  $ 17950.

Explanation:

Pearl E. White Orthodontist

Schedule of Accounts Receivable by Age

December 31, 2021

Age Group                  Amount           Estimated        Uncollectible

                                    Receivable        Percent

Not yet due                $ 40,000                 4%              1600

0-90 days past due     16,000                   20%            3200

91-180 days past due     11,000                  25%          2750

More than 180 days past due 13,000        80%           10400

Total                           $ 80,000                                  17950

Estimated Allowance for Uncollectible Accounts  $ 17950.

The above schedule shows the accounts receivable assigned to one of the four classes based on its days past due . The amounts of each class are multiplied by the estimated percent of the uncollectibles accounts. The total amount in the Uncollectible is the estimated balance for the Allowance for Uncollectible Accounts  $ 17950.

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3 years ago
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Which of the following is NOT an important business process for managing the supply chain?
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Answer: C. Responding to customer request promptly

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Answer:

Answered

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An example of a company that I could start is a travel advisory business. The best business structure that would make the most sense is an S corporation. This is because it provides protection from personal liability. It will also allow me to report my share of loss and profits of the company in my tax filings.
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