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SIZIF [17.4K]
3 years ago
11

Which of the following statements is CORRECT?a. The NPV method assumes that cash flows will be reinvested at the risk-free rate,

while the IRR method assumes reinvestment at the IRR.b. The NPV method assumes that cash flows will be reinvested at the cost of capital, while the IRR method assumes reinvestment at the risk-free rate.c. The NPV method does not consider all relevant cash flows, particularly cash flows beyond the payback period.d. The IRR method does not consider all relevant cash flows, particularly cash flows beyond the payback period.e. The NPV method assumes that cash flows will be reinvested at the cost of capital, while the IRR method assumes reinvestment at the IRR.
Business
1 answer:
quester [9]3 years ago
8 0

Answer:

e. The NPV method assumes that cash flows will be reinvested at the cost of capital, while the IRR method assumes reinvestment at the IRR. Explanation:

Under the NPV method that is the Net Present Value method, discount rate used is cost of capital of a company, that is Weighted Average Cost of Capital. This is to ensure that the company is able to meet its current financing cost.

Under the IRR method the rate is calculated at which the return of investment and cost of such project or investment is equal, if it is more than cost of capital the project is acceptable.

Therefore, statement e stating that the NPV method uses the cost of capital and IRR uses the IRR rate is correct.

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Entertainer's Aid plans five annual colossal concerts, each in a different nation's capital. The concerts will raise funds for a
Finger [1]

Answer: $5,569,758.43

Explanation:

First you need to find the present value of the Perpetuity at the end of the fifth year.

Present value of Perpetuity = Amount / Interest rate

= 3,000,000 / 9%

= $33,333,333.33

Given an interest rate of 9%, Entertainer's aid should deposit an amount per year that would lead to the endowment having $33,333,333.33 at the end of the fifth year.

Future value of annuity = Annuity * Future value of annuity interest factor, 9%, 5 years

33,333,333.33 = Annuity * 5.9847

Annuity = 33,333,333.33 / 5.9847

= $5,569,758.43

3 0
3 years ago
At June 30, Almond Co.'s cash balance was $10,012 before adjustments, while its ending bank statement balance was $10,772. Check
Lunna [17]

Answer:

The correct option here is B) $9,961.

Explanation:

For taking out the adjusted cash balance at June 30 we will subtract the error in ledger amount and debit memo for monthly service charge and add the interest earned from the initial cash balance before any adjustment is made.

INITIAL CASH BALANCE = $10,012

(-) ERROR IN LEDGER      = $95 -$59

                                         = $36 ( this is the amount that Almond co's have to

                                                    pay more )

(+) INTEREST EARNED    = $35

(-) SERVICE CHARGES    = $50

ADJUSTED CASH BALANCE = $9961

3 0
3 years ago
French and German farmers wanting to buy equipment from an American manufacturer based in the U.S. will be: A) Demanding dollars
shepuryov [24]

Answer:

C) Supplying euros and demanding dollars in the foreign exchange market.

Explanation:

Foreign exchange market can be defined as type of market in which the currency of one country is converted into that of another country.

For example, the conversion of dollars of the United States of America can be converted into naira (Nigeria) at the foreign exchange market.

Hence, French and German farmers wanting to buy equipment from an American manufacturer based in the U.S. will be supplying euros and demanding dollars in the foreign exchange market because the medium of exchange (legal tender) in France and Germany is the "Euros" while it is "Dollars" in the United States of America.

6 0
3 years ago
The difference between accounting profit and economic profit is.
Vadim26 [7]

Answer:

Accounting profit - Your actual profit

Economic profit - Profit, but opportunity cost factored out

Explanation:

Accounting profit is how much you made (Revenue - Explicit Cost.

Economic profit includes implicit costs, or opportunity cost. If you could have made $100,000 at a different job, you subtract that. If Accounting-Economic profit is 0 or higher, you should stay in business.

7 0
2 years ago
Inventory turnover is calculated as _____. a) cost of merchandise sold divided by inventory b) cost of merchandise sold divided
Molodets [167]

Answer:

B) cost of merchandise sold divided by average inventory.

Explanation:

Inventory turnover: It is a liquidity ratio that measures the number of times on average a company sold or replaced its inventory during the period. Computed as the cost of goods sold / by the average inventory on hand during the period. Analysts compute average inventory from the beginning and ending inventory balances. The ideal inventory turnover ratio is about 4 to 6, it is a rate at which restock item is well balanced with the sold inventory.

7 0
3 years ago
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