Monty Manufacturing builds playground equipment that it sells to elementary schools and municipalities. Monty's management has
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Answer: Present value of the cash flows of the company is $1,158,824.
Explanation: Philips industries have the cash flow for $197,000. The industry needs to find the present value of the cash flow and the cash flows growth is decreasing every year by 6%.
The present value of the cash flows for perpetuity with decreasing growth rate is:
where, Cash flow for the year 1 (C1) = $197,000
Discount rate (r) = 11%
Growth rate (g) = -6%
Present value of the cash flows (PV) = $1,158,824
Therefore the present value of the cash flows of the company is $1,158,824.
Answer:
The oranges should be picked in 2 weeks for maximum return
Explanation:
We assume that the return of the owner is y ($)
Assume that the number of weeks the oranges should be picked to have maximum return is x (weeks). (x≥0)
If collect now, the price for each bushel is $27
As the price per bushel decrease by $1.50 per bushel each week
=> After x weeks, the price of a bushel decrease: 1.5x ($)
=> The price of 1 bushel after x weeks is: 27 - 1.5x ($)
If collect now, each tree can yield 7 bushels
As the yield increases by half a bushel per week for the next 5 weeks
=> After x weeks with x ≤ 5, each trees would yields: 7 + 0.5x (bushels)
The return = The price of each bushes × The quantity of bushels
=>
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We have: if the equation has the form of with a≠0, its maximum value is:
In the equation , we have: a = -0.75; b = 3; c = 189
=>
To look for the number of weeks, we should find x (0≤x≤5) with which y = 192
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⇔ x = 2
The oranges should be picked in 2 weeks for maximum return