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3 years ago

A firm, with an 18% cost of capital, is considering the

Business

1 answer:

mafiozo [28]3 years ago

3 0

Answer:

a. $316,920

Explanation:

The computation of the net present value for Project A is shown below:

The net present value = Cash inflow after considering the discount factor - initial cost or initial investment

Cash inflow after considering the discount factor = $7,400,000

The discount factor for 4 years at 18% = 0.5158

So, the cash inflow is

= $7,400,000 × 0.5158

= $3,816,920

And, the initial investment is $3,500,000

So, the net present value is

= $3,816,920 - $3,500,000

= $316,920

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ABC Systems located in Alabama expects a 9% after-tax rate of return on an equipment investment. The state tax rate is 6%. If th

Molodets [167]

Answer: 14.5%

Explanation:

The after tax return is calculated by the formula:

= Before tax return * (1 - federal tax) * (1 - State tax)

As we have the after tax return, we should work on the before tax:

9% = Before tax return * (1 - 34%) * (1 - 6%)

9% = Before tax return * 0.6204

Before tax return = 9% / 0.6204

= 14.5%

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3 years ago

What tends to happen to the inflation rate if the Fed works to lower the unemployment rate? Why?

STatiana [176]

Answer:

The inflation rate increases because of increased spending.

Explanation:

In order to lower the unemployment rate, the government needs to increase production. Higher production needs more investment. The investment will increase if the cost of borrowing decreases. So the feds need to decrease the interest rate on borrowings.

This decrease in interest rate will cause the investment to increase, as a result the firms will produce more. To increase production, they will need more workers. In this way, the unemployment rate will decrease.

6 0

3 years ago

What effect do my communication skills have on my ability to pursue, obtain and excel at my job?

Roman55 [17]

Depending on what you work at if you are a hard worker you can excel at many things. If you speak 2 languages that can also help you go up. So does your personality

6 0

3 years ago

Which of the following statements is true if a bond's stated interest rate is higher than the market rate?

Feliz [49]

Answer: The bond will be issued at a premium

Explanation: If the interest rate on bond is higher than the market interest rate then the investors of such bond will get a greater benefit. Hence to get the greater benefit an investor must pay a higher value, thus, the bond will be issued at premium.

Higher interest rate means the company will pay interest to investors mare than i the general rate in market, Therefore, company can charge investors more from a more valuable asset.

Hence from the above we can conclude that the correct option is c.

5 0

3 years ago

For its three investment centers, Gerrard Company accumulates the following data: I II III Sales $2,060,000 $4,019,000 $4,085,00

Andrej [43]

Answer:

Investment centre ROI

1 24.9%

II 32.0%

III 34.0%

Explanation:

<em>Return on Investment is the proportion of operating assets that an investment center earned as as net operating income. </em>

It is calculated as follows

ROI = operating income/operating assets

Investment centre

I 1,267,000/5,068,000=24.9%

II 2,579,840/8,062,000=32.0%

III 4,137,800/12,170,000=34.0%

7 0

3 years ago