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nikklg [1K]
2 years ago
15

Marko, Inc., is considering the purchase of ABC Co. Marko believes that ABC Co. can generate cash flows of $6300, $11,300, and $

17,500 over the next three years, respectively. After that time, they feel the business will be worthless. Marko has determined that a rate of return of 11 percent is applicable to this potential purchase. What is Marko willing to pay today to buy ABC Co.?
Business
1 answer:
sladkih [1.3K]2 years ago
7 0

Answer:

$27,642.86

Explanation:

To determine the price Marko will pay today to buy ABC Co, one has to find the present value of the cash flows.

Present value is the sum of discounted cash flows.

Present value can be calculated using a financial calculator.

Cash flow in year one = $6300

Cash flow in year two = $11,300

Cash flow in year three = $17,500

I = 11%

Present value = $27,642.86

To find the present value using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

I hope my answer helps you

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Answer:

The net impact on the income will be 2,795,000 each year

Explanation:

The purchase will generate the followng:

4.3 depreciation expense

and a tax shield, as this expense decrease the net income:

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4.3 x 35% = 1.505 millions

total impact on net income:

depreciation expense - tax shield

4.3 - 1.505 = 2.795‬ millions net impact

4 0
3 years ago
You would like to combine a risky stock with a beta of 1.5 with U.S. Treasury bills in such a way that the risk level of the por
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Answer:

33.33%

Explanation:

Let weight of T-bill be x, therefore weight of stock will be 1-x

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1 = (1-x)*1.5 + x*0

1 = 1.5 - 1.5x

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x = 0.3333

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2 years ago
Indicate which barrier to entry appropriately explains why a monopoly exists in each scenario?
SpyIntel [72]
It should be b I hope that help
4 0
2 years ago
While implementing an affirmative action plan, an employer is expected to do all of the following except:establish objectives th
Zigmanuir [339]

Answer:

set quotas for the underrepresented groups, and ensure they are met even if it is necessary to hire a less qualified candidate.

Explanation:

Business strategy sets the overall direction for the business because it focuses on defining how a business would achieve its goals, objectives, and mission; as well as the funds and material resources required to implement or execute the business plan.

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This ultimately implies that, planning is a strategic technique used by organizations to make an aggregate plan for its manufacturing (production) process typically ahead of time, in order to have an idea of the level of goods that are to be produced and what resources are required so as to reduce the total cost of production to its barest minimum.

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I. Establish objectives that can be met by applying good faith efforts.

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8 0
2 years ago
On a shopping​ trip, Melanie decided to buy a light blue coat made from woven fabric. A tag on the coat stated that the price wa
ra1l [238]

Answer:

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Explanation:

Melanie decided to buy a coat priced $79.95.  

When she brought a coat to the sales clerk, she found out that it is on a 20% discount and she has to $15.99 less than the original price.  

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6 0
2 years ago
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