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tino4ka555 [31]
3 years ago
12

Based upon the following data, which of the following mutually exclusive projects should you choose if your required return is 1

0%?
Year Investment A Investment B
0 -$150 -$150
1 80 40
2 40 50
3 40 60
4 30 55
A. Investment A with an NPV of 633%.
B. Investment B with an NPV of 6.33%.
C. Investment A with an NPV of 10.33%.
D. Investment B with an NPV of 10.33%.
E. Both projects since they have positive NPV's.
Business
1 answer:
scoray [572]3 years ago
7 0

Answer:

d

Explanation:

Net present value is the present value of after tax cash flows from an investment less the amount invested.  

NPV can be calculated using a financial calculator  

Investment A

Cash flow in year 0 = -$150

Cash flow in year 1 = $80

Cash flow in year 2 = $40

Cash flow in year 3 = $40

Cash flow in year 4 = $30

I = 10%

NPV = 6.33

Investment A

Cash flow in year 0 = -$150

Cash flow in year 1 = $40

Cash flow in year 2 = $50

Cash flow in year 3 = $60

Cash flow in year 4 = $55

I = 10%

NPV = 10.33

Project B has a higher NPV and it should be chosen

To find the NPV using a financial calculator:

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  

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Answer:

Option C. $0.11

Option D. $0.95

Explanation:

As we know that the Transfer Price is set at either selling price for an outside market or variable cost plus opportunity cost if the product sold is to internal market present within the organization (Inter group or inter division sales).

However, the division can still charge upper limit price to the division which is $1 market price of the product.

Upper limit = $1

As it is given that the selling of the additional units will be among divisions which means its inter division market. Hence the lower limit will be used here.

Lower Limit = Variable cost + opportunity cost

Here

Variable cost is $10 cents

And

Opportunity cost will be zero here as the division will be using its excess capacity to sell to the other division, so there is no opportunity cost.

So, by putting values, we have:

Lower Limit = $0.1 - $0 = $0.1

Upper limit = $1

Thus the transfer price set for each bell can be between $1 and $0.1. So the $0.11 and $0.95 falls between these range and both are correct options here.

4 0
3 years ago
Pop Consulting leased machinery to Red Inc. on July 1, 2018. The lease was recorded as a sales type lease. The present value of
labwork [276]

Answer:

The increase in earnings is $136511.56

Explanation:

Since the lease is a sale type of lease,it means that as soon as the machinery is delivered to the lessee,profit should be recognized on the lease transaction,which is computed below:

Profit on lease=present value of lease payments-costs

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                          =$118149

However,every six months interest is charged on the lease,which clearly indicates another source of earnings,the interest in the first six months is given below:

Interest=($274149-$44617)*8%

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Please note that interest is charged after lease payment as lease payment is made in advance not in arrears.

Conclusively, the increase in earnings is $118149+$18362.56

That is $136511.56

                                                                   

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The market opportunities most relevant to a company are those that
Wewaii [24]

Answer:

are in their directly related field, they are going to have more market opportunities if they stick to their target market

Explanation:

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Warren corporation purchased a truck at a cost of $60,000. It has an estimated useful life of five years and estimated residual
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Answer:

What is the amount of depreciation that warren should record for year 3 under the straight-line depreciation method? $15500

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Year 1 55000 12000          43000

Year 2 43000 12000          31000

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6 0
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Answer:

b. $700

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8 0
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