The service profit chain is the service sequence from employees to customers to profit. According to this concept, the company's
1 answer:
You might be interested in
The returns of a capital amount to a compensation rate for depositing the money, to calculate these returns an interest rate is used by which the deposited capital is multiplied, in this case the rate is 4%.
As the money distributed is only the product of interest, then that money is the result of multiplying the capital by the interest rate, to obtain how much money Mr. Jefferson contributed, the reverse process will have to be done.
Answers
let <em>C</em> be the capital, then :
The capital contributed by Mr. Jefferson was <em>$4,262,500</em>
If the company requires a return of 10 percent for such an investment, calculate the present value of the project.
The present value of the project is $72349.51.
Since we consider only incremental cash flows for a project, we consider $21,600 for year one and calculate a 4% increase for each of the additional years.
We then calculate the Present Value Interest Factor (PVIF) at 10% for four years using the formula :
PVIF = 1 / [(1+r)^n]
Next, we find the product of the respective cash flows and PVIF for each year.
Finally, we find the total of the discounted cash flows for the four years to find the Present Value of the project.
