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PSYCHO15rus [73]
4 years ago
13

Your company is considering purchasing a machine for $270,000. This machine will bring revenues of $100,000 in the second year,

of $150,000 in the third year, and of $75,000 in the fourth year. The machine will be worthless after the fourth year, so you will not be able to get any resale value out of it. If the interest rate is 6% per year, should you go ahead with this project?
Business
1 answer:
kumpel [21]4 years ago
7 0

Answer:

Yes we should go with this project because it has a positive NPV of $4,350

Explanation:

We need to calculate the net present value of the machine to decide whether to invest in the machine or not.

As per Given Data

Costs $270,000

Cash Inflows

Year 2      $100,000

Year 3      $150,000

Year 4      $75,000

Interest Rate = 6%

Net Present Value

As we know Net Present value is calculated by discounting each years cash flows using using the Weighted Average cost of Capital.

Year       Cash Inflows    Discount factor 13%  Present values

Year 0      $(270,000)     (1+6%)^-0                 $(270,000)

Year 2      $100,000        (1+6%)^-2                 $89,000

Year 3      $150,000        (1+6%)^-3                 $125,943

Year 4      $75,000          (1+6%)^-4                 <u>$59,407  </u>

Net present value                                            <u>$4,350   </u>

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For every minute you are angry you lose 60 seconds of happiness meaning
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I think it means whenever your angry you lose every single minute
6 0
3 years ago
EMC Corporation has never paid a dividend. Its current free cash flow of $490,000 is expected to grow at a constant rate of 4.4%
disa [49]

Answer:

$5,697,674

Explanation:

Dividend Valuation method is used to value the operations of a company based on the dividend paid, its growth rate and rate of return/WACC. The price is calculated by calculating present value of future dividend payment.

Free cash flow is the residual cash flow of operation after paying the capital expenditure from net income of the company. It represent the cash from the operations.

Formula to calculate the value of operation

Value of Operations = FCF / ( WACC - growth rate )

Value of Operations = $490,000 / ( 13% - 4.4% )

Value of Operations = $5,697,674

7 0
3 years ago
In what areas do federal agencies regulate to ensure safety and the general
NeTakaya

Answer:

d. All of the above

Explanation:

Government regulations are the rules that players in an industry must abide by. In a free-market economy like the US, the government's main role is to regulate economic activities. The government enforces regulation through its various agencies.

The areas of regulations include but are not limited to

  1. Protecting consumers from undue exploitation by businesses,
  2. Encourage fair business competition
  3. Promote a healthy, safe work environment for employees
  4. Promote and sustain a clean environment
  5. Private data protection and security
6 0
3 years ago
3. The store purchases used goods for resale from people that bring items to the store. Since that can occur anytime that the st
Dafna11 [192]

Answer:

Weakness 1 is signed paper are not stored in safe and secured location.

Weakness 2 is approval is not taken from any manager or person before purchasing the item from customers.

Explanation:

The store should keep a track in the system for the purchase of items from its customers. The store should get approval before purchasing the product and the cash dealing should be assigned to designated person who will be responsible for the payment to its customers. This will reduce chances of fraud as the cash will be handled by only one person and tracking will be easy.

3 0
3 years ago
the xyz company is a profit-maximizing firm with a monopoly in the production of pennants. the firm sells its pennants for $10 e
marshall27 [118]

Marginal cost equals marginal revenue. The additional money that results from raising the quantity is known as the marginal revenue.

Therefore, profit is maximised when marginal cost equals marginal revenue, which is the same as saying when marginal profit equals zero. This additional revenue is also referred to as being "at the margin. In general, marginal revenue tends to decline as production rises for any given level of customer demand. There is no economic gain in equilibrium since marginal revenue and costs

Marginal cost

The additional expense brought on by increasing the quantity is known as the marginal cost. The additional expense at the margin.

Marginal revenue

The additional money that results from raising the quantity is known as the marginal revenue. The additional revenue at the margin.

The XYZ Company is a profit-maximizing firm with a monopoly in the production of pennants. The firm sells its pennants for $10 each. We can conclude that the XYZ Company is producing a level of output at which:

Select one:  a. average total cost equals $10.    b. average total cost is greater than $10.    c. marginal revenue equals $10.    d. marginal cost equals marginal revenue.

Learn more about marginal cost and marginal revenue here:

brainly.com/question/10929905

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7 0
1 year ago
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