1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
KATRIN_1 [288]
3 years ago
6

Ted, a project manager, wants to invest in a project with an initial cost of $58,500 and cash flows of $32,400 and $38,500 in Ye

ars 1 and 2. Rosita, his boss, requires a discount rate of 10 percent and also a return of $1.10 in today's dollars for every $1 invested. Will Ted get his project approved? Calculate IRR and PI for this project to make a decision.
Business
1 answer:
Art [367]3 years ago
4 0

Answer:

The project will not be approved

Explanation:

Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested

IRR can be calculated with a financial calculator  

Cash flow in year 0 = $-58,500

Cash flow in year 1 = $32,400

Cash flow in year 2 = $38,500

IRR = 13,41%

profitability index = 1 + (NPV / Initial investment)  

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  

Cash flow in year 0 = $-58,500

Cash flow in year 1 = $32,400

Cash flow in year 2 = $38,500

I = 10%

NPV = $2,772.72

PI = 1 + $2,772.72 / $58,500 = 1.04

The project will not be approved because the PI is less than the amount of return the boss wants even though the IRR is less than the discount rate

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  

To find the IRR 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 IRR button and then press the compute button.  

You might be interested in
True or False:
kramer

Explanation:

22

3 25

6 15

a. Determine which variable is the dependent variable.

b. Compute the least squares estimated line.

c. Compute the coefficient of determination. How would you interpret this value

5 0
2 years ago
The statement of cash flows presents:
Elena-2011 [213]

Answer:

Option C is correct.

Explanation:

The statement of cash flow presents us the information about the cash, where the cash was invested including how much cash we have earned by investing in projects, how much cash the operations has created and how much cash has been created from the financing activities. This statement tells us about the origin of the cash and where the company is spending it.

4 0
3 years ago
Presented below is information related to Rembrandt Inc.’s inventory. (per unit) Skis Boots Parkas Historical cost $190.00 $106.
dybincka [34]

Answer:

A.Skis = 161.00

Boots = 108

Parkas = 50

B) Skis = 161

Boots = 106

Parkas = 50

Explanation:

(a)Skis = 212.00-32.00-19.00= 161.00

Boots = 145-29-8= 108

Parkas = 73.75-21.25-2.5=50

(b)Skis = 161

Boots = 106

Parkas = 50

7 0
2 years ago
Cumberland Co. sells $2,000 of inventory to Hancock Co. for cash. Cumberland paid $1,250 for the merchandise. Under a perpetual
mafiozo [28]

Answer:

Cash (Debit)                                    $2,000

         Sales (Credit)                                         $2,000

Cost of Merchandise Sold (Debit)   $1,250

         Merchandise Inventory (Credit)             $1,250

Explanation:

Cash (Debit): Cash increase because it is a Cash Sale, cash increases by debit.

     

Sales (Credit):  to register the sale, Sales(income) increases by credit .

Cost of Merchandise Sold (Debit): to record the cost of the merchandise sold, the costs increase by debit.      

Merchandise Inventory (Credit): to record the inventory output of the merchandise sold, inventory decreases by credit.

4 0
3 years ago
Northwest Catering owns and operates several restaurant services in Oregon, Washington, and Idaho. One restaurant chain has expe
Tcecarenko [31]

Answer:

1.3 million  Impaired asset is the determined amount

Explanation:

Asset impaired as the estimated fair value cash flows is lower than book value

Impairment loss = Fair value - Book value  

= 3.0 million - 4.3 million

= 1.3 million Impaired asset

An impaired asset is an asset that has a market value less than the value which was disclosed on the organisation balance sheet. When an asset is said to be impaired, it will need to be written down on the company's balance sheet to its current market value.

7 0
3 years ago
Other questions:
  • Q 4.13: salaries and wages expense should have been accrued on december 31st, but the entry was not made. the result of this ove
    7·1 answer
  • Suppose that country a has higher real income per capita than country
    8·1 answer
  • In the united​ states, a reason for the increase of the labor force participation rate for women is that
    5·1 answer
  • Which of the following statements is NOT one of the differentiation strategy​ decisions? A. Modular design to aid product differ
    14·2 answers
  • Identify the careers that require a college degree and those that require technical training.
    15·1 answer
  • According to the quantity theory:
    9·1 answer
  • True or false?John says to his friend, "This concert is going to cost me $20 when I buy the ticket." His friend corrects him and
    6·1 answer
  • People who make goods and services are called _____ . <br> consumers<br> producers<br> investors
    6·2 answers
  • The following is a list of accounts commonly seen in financial statements. Identify whether each account appears on the balance
    6·1 answer
  • Who must personally certify the financial statements and company disclosures or risk financial penalties and criminal prosecutio
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!