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Juli2301 [7.4K]
4 years ago
10

An auto plant that costs $200 million to build can produce a line of flexfuel cars that will produce cash flows with a present v

alue of $270 million if the line is successful but only $120 million if it is unsuccessful. You believe that the probability of success is only about 52%. You will learn whether the line is successful immediately after building the plant. Calculate the expected NPV.
Business
1 answer:
AleksAgata [21]4 years ago
6 0

Answer:

NPV = - $ 2

Explanation:

given data

costs = $200 million

present value successful = $270 million

unsuccessful = $120 million

probability of success = 52%

to find out

expected NPV

solution

we know cost is = $200

and Cash flows if Successful = $270 and Probability = 52%

so

Cash flows if unsuccessful = $120 and Probability will be= 100% - 52% = 48 %

so

expected Present value of the venture will be

expected Present value of the venture  = $270 × 52% + $120 × 48 %

expected Present value of the venture  =  $198

so NPV = $198 - $200

NPV = - $ 2

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Using the income statement for Times Mirror and Glass Co., compute the following ratios:
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Answer:

(A) Interest coverage charge ratio= 6.21

(B) Fixed charge coverage = 2.84

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Explanation:

(A) The Interest coverage charge ratio can be calculated as follows= EBIT/Interest expense

= 45,300/7,300

= 6.21

(B) The fixed charge coverage can be calculated as follows

= income before fixed charge + interest/fixed charges + interest

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= 58,600/20,600

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(C) The profit margin ratio can be calculated as follows

= Net income/sales × 100

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=0.0857 × 100

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(D) The total assets turnover can be calculated as follows

= Sales/total assets

= 266,000/172,000

= 1.55

(E) The return on assets can be calculated as follows

= Net income/Total assets × 100

= 22,800/172,000 × 100

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= 13.26%

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March 1 Paid monthly rent of $890. 3 Performed services for $100 on account. 5 Performed services for cash of $55. 8 Purchased e
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Answer:

                             Journal Entries    

Date  Account titles & explanations Debit Credit  

Mar-01                 Rent expense           890  

                                  To cash                890  

Mar-03              Account receivable       100  

                           To service revenue                100  

Mar-05                          Cash      55  

                               Service revenue                 55  

Mar-08                       Equipment            455  

                                        Cash                  60  

                               accounts payable                395  

Mar-12                              Cash      100  

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Mar-14                    Wage expense     390  

                                      To cash                 390  

Mar-22                   Utility expense        54  

                                       To cash                 54  

Mar-24                          Cash       1,110  

                             To notes payable               1,110  

Mar-27                Repair & maintenance       160  

                                       To cash                 160  

Mar-28                 Accounts payable       395  

                                         To cash                 395  

Mar-30                   Prepaid Insurance            1,330  

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Explanation:

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In building a sustainable organization, management should strive to make the organization sustainable in three areas ? ________.
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3 years ago
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The real rate of return is 3.15%.

What is real rate of return?
The annual percentage of financial gain on an investment that has been prorated for inflation is known as the real rate of return. As a result, the real rate of return provides an accurate representation of the real purchasing power of the a given sum of money over time. The investor can calculate how much more of a nominal return seems to be real return by adjusting this same nominal return to account for inflation. Investors must account for the effects of additional factors, including such taxes and investing fees, in addition to adjusting for inflation, in order to calculate real returns on their investments or to make investment decisions. Subtracting this same nominal interest rate from the inflation rate yields the real rate of return.


1+real rate = (1+rate of return) / (1+inflation)
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