Answer:
Option e is the correct answer.
As the NPV of project 1 is higher than Project 2's NPV, Project 1 is recommended,
Explanation:
To determine which project to choose, we will calculate the net present value (NPV) of both projects and the project with the higher NPV will be chosen.
NPV is the present value of the future cash flows inflows expected from the project less any initial cost. The formula for NPV is as follows,
NPV = CF1 / (1+WACC) + CF2 / (1+WACC)^2 + ... + CFn / (1+WACC)^n - Initial outlay
Where,
- CF1, CF2,... is the cash flow in year 1, Year 2 and so on
NPV - Project 1 = 60 / (1+0.1) + 60 / (1+0.1)^2 + 60 / (1+0.1)^3 +
220 / (1+0.1)^4 + 220 / (1+0.1)^5 - 200
NPV - Project 1 = $236.076 rounded off to $236.08
NPV - Project 22 = 300 / (1+0.1) + 300 / (1+0.1)^2 + 100 / (1+0.1)^3 +
100 / (1+0.1)^4 + 100 / (1+0.1)^5 - 600
NPV - Project 2 = $126.1861 rounded off to $126.19
As the NPV of project 1 is higher than Project 2's NPV, Project 1 is recommended,
Answer:
The answer is $2,857.14
Explanation:
Let us assume Sales be $500 per month
Monthly
Sales $500
Less: Variable Cost(72%) $360
Contribution(will be 28%) $140
Less: Fixed Cost(Assume) 0
Operating Income $140
If there should be an increase of $800 per month in the operating Income
Revised Operating Income $140 + $800 = $940
Therefore Contribution is equal to $ 940
If Contribution is $940 equal to 28%, then Sales be 100%
$940 ÷ 28%
$3,357.14
Therefore additional increase in Sales revenue required per month
$3,357.14 - $500
$2,857.14
I would guess C. expansion
Both B and D are both negative that describe economic declines and a trough is a turning point in a business cycle. So, by the process of elimination, I would choose C.
