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LuckyWell [14K]
3 years ago
15

Peeker Industries is analyzing an average-risk project, and the following data have been developed. Unit sales will be constant,

but the sales price should increase with inflation. Fixed costs will also be constant, but variable costs should rise with inflation. The project should last for 3 years, it will be depreciated on a straight-line basis, and there will be no salvage value. No change in net operating working capital would be required. This is just one of many projects for the firm, so any losses on this project can be used to offset Page 2 of 3 gains on other firm projects. The marketing manager does not think it is necessary to adjust for inflation since both the sales price and the variable costs will rise at the same rate, but the CFO thinks an inflation adjustment is required. What is the difference in the expected NPV if the inflation adjustment is made versus if it is not made? WACC 10.0% Net investment cost (depreciable basis) $200,000 Units sold 50,000 Average price per unit, Year 1 $25.00 Fixed oper. costs excl. depreciation (constant) $150,000 Variable oper. cost/unit, Year 1 $20.20 Annual depreciation rate 33.333% Expected inflation 4.00% Tax rate 40.0%
Business
1 answer:
Anni [7]3 years ago
6 0

Answer:

Explanation:

can you please help me please

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The loan officer at 2nd National Bank tells Lana she can afford a monthly payment of $1,900 on her new home loan. Assuming this
Olegator [25]

Answer:

5.56%

Explanation:

Annual payment = Monthly payment * 12

Annual payment = $1,900 * 12

Annual payment =  $22,800

So, she can afford to pay $22,800 in a year

The interest rate is Lana getting = Annual payment / principal balance

= $22,800 / $410,000

= 0.0556

= 5.56%

3 0
3 years ago
risk is the risk of a decline in a bond's value due to an increase in interest rates. This risk is higher on bonds that have lon
Ipatiy [6.2K]

Answer:

<u>Price</u> risk is the risk of a decline in a bond's value due to an increase in interest rates. This risk is higher on bonds that have long maturities than on bonds that will mature in the near future.

<u>Reinvestment</u> risk is the risk that a decline in interest rates will lead to a decline in income from a bond portfolio. This risk is obviously high on callable bonds. It is also high on short-term bonds because the shorter the bond's maturity, the fewer the years before the relatively high old-coupon bonds will be replaced with new low-coupon issues.

Which type of risk is more relevant to an investor depends on the investor's <u>investment horizon</u>, which is the period of time an investor plans to hold a particular investment.

3 0
4 years ago
Carol wants to invest money in a 6% CD account that compounds semiannually. Carol would like the account to have a balance of $1
Luba_88 [7]

Answer:

the formula for compound interest future value is S=P*((1+i)exp n)-1/i)expt

Explanation:

The answer is $6,186

130000=X*((1+0.06)exp 14)-1/0.06)

X= 6,186

3 0
4 years ago
Help! Will give brainliest;)
poizon [28]
False that just don’t make since lol
6 0
3 years ago
Read 2 more answers
The supply of a product normally decreases if ?
UNO [17]

Answer:

the price of the product increases

Explanation:

the high the price of the commodity the lower the quality demanded

7 0
2 years ago
Read 2 more answers
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