The following information is taken from Reagan Company's December 31 balance sheet: Cash and cash equivalents $ 9,219 Accounts r
1 answer:
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Answer:
Speed of the truck should be 64.03 miles per hour to minimize the cost.
Explanation:
Data provided in the question:
Distance = 150 miles
Wage = $14 per hour
Cost of fuel = ( v² ÷ 250 )
Now,
Total time taken = Distance ÷ speed
= 150 ÷ v
Therefore,
Total cost, TC = Wage + Cost of fuel
= $14 × (150 ÷ v) + ( v² ÷ 250 )
=
for point of minima differentiating with respect to 'v'
TC'(v) = = 0
or
= 0
or
or
v³ = 2100 × 125
or
v = ∛262500
or
v = 64.03 miles per hour
hence,
Speed of the truck should be 64.03 miles per hour to minimize the cost.
Answer:
MIRR -16.50%
They should reject the project is it destroys capital it do not meet to pay up the cost of the investment.
A typical firm’s IRR will be greater than its MIR
If the project yields higher than the cost of capital the IRR will be higher than the MIRR as reinvest the cashflow at the project yield rather than copany's cost of capital, thus it overstate the return.
Explanation:
WACC (cost of capital, reinvestment and financiation rate) = 7%
<em>Cash inflow:</em>
Year 1 275000 336,886.825
Year 3 450000 481500
Year 4 450000 450000
Total 1,268,386.825
<em>Cash outflow:</em>
F= -2,500,000
Year 2 -125000 - 109, 179.841
Total 2,609,179.841
Now we can solve for MIRR:
MIRR - 16.49991% = -16.50%