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Paraphin [41]
3 years ago
13

Brewster’s is considering a project with a 5-year life and an initial cost of $120,000. The discount rate for the project is 12

percent. The firm expects to sell 2,100 units a year at a net cash flow per unit of $20. The firm will have the option to abandon this project after three years at which time it could sell the project for $50,000. The firm is interested in knowing how the project will perform if the sales forecasts for Years 4 and 5 of the project are revised such that there is a 50 percent chance the sales will be either 1,400 or 2,500 units a year. What is the net present value of this project given these revised sales forecasts
Business
1 answer:
Ket [755]3 years ago
3 0

Answer:

NPV = $27,792

Explanation:

Net Present Value = Present Value of Future Cash Flows - Initial Investments

To compute the Present value of Future Cash Flows, we need to first compute the cash inflows during the life of the project:

Year 1: 2,100 * 20 = $42,000

Year 2: 2,100 * 20 = $42,000

Year 3: 2,100 * 20 = $42,000

The units of Year 4 and Year 5 are calculated as follows:

⇒ (0.5 * 1,400) + (0.5 * 2,500) = 1,950 units

Year 4: 1,950 * 20 = $39,000

Year 5: 1,950 * 20 = $39.000

Now, discount the cash inflows at a rate of 12% to calculate the Present Value of Future Cash Flows

⇒ <u>42,000 </u>+ <u>42,000</u>+ <u>42,000</u> + <u>39,000</u> + <u>39,000</u>

     (1.12)^1      (1.12)^2   (1.12)^3    (1.12)^4      (1.12)^5

⇒  37,500 + 33,482 + 29,895 + 24,785 + 22,130  

⇒ $147,792

Net Present Value = Present Value of Future Cash Flows - Initial Investments

NPV = 147,792 - 120,000

NPV = $27,792

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Creditors often include several requirements in a mortgage contract in order to protect their interests. In order to ensure that
muminat

Answer:

prepayment penalty, maintain, insurance, mortgage

Explanation:

Prepayment penalty clause relates to the situation that the borrower shall not prepay the borrowed amount as to the creditor it will be loss in the form of interest, thus, it do not want that the borrower shall collect from any other source.

The property should not loose its value, or the value shall not be degraded as that will result in loss, as when the borrower fails to repay the loan, creditor has the right to sell it, if it will not be maintained the value will degrade.

Insurance is required so that same as in above mentioned point that the value is not lost, and then the value of loan is fully recoverable.

If the value of loan exceeds 80% of value of property there shall be mortgage as the lender ensures his payment and no failure shall be there.

5 0
3 years ago
The largest type of municipal bonds outstanding is ________. Group of answer choices revenue bonds industrial development bonds
Ierofanga [76]

Answer:

revenue bonds

Explanation:

A revenue bond is a Municipal bond used to fund projects that yield income and are secured through a particular source of revenue.

Characteristics of revenue bond.

1. It takes long time to maturity.

2. It yields more returns than the general obligation bond.

The purpose of a revenue bond is so that government can finance projects that generates income such as toll roads, airports, seaports, electricity projects, water projects etc.

6 0
3 years ago
Read 2 more answers
In a set of statistics the _____ is the middle number
tino4ka555 [31]
C) Median

is your answer

Median is "the middle number in a given sequence of numbers, or the average of the two middle numbers when there is a even amount of numbers in a sequence"

For example, your median is 3 in a sequence of: 1,2,3,4,5

hope this helps
3 0
3 years ago
The village of Shelburne operates a nine-hole golf course as an enterprise fund. You are provided with the following information
xeze [42]

Answer:

$1,006,701

Explanation:

Preparation of the net position section of Shelburne’s of net position

First step is to calculate the ending balance

Net investment in capital assets:

Beginning balance$585,400

Add Leased equipment $200,000

Less Lease obligation $160,000

($200,000 − $40,000)

Less Sale of equipment $6,100

Add New equipment (lawnmower) $75,000

Less Note related to lawnmower $25,000 Less Depreciation and amortization $75,000

Ending balance$594,300

Now let Prepare the net position section of Shelburne’s of net position

VILLAGE OF SHELBURNE Golf Course Enterprise Fund

Partial Statement of Net Position As of year End

Net Position:

Net Position—Net Investment In Capital Assets $594,300

Add Net Position—Restricted$5,000

Add Net Position—Unrestricted$407,401

Total Net Position $1,006,701

($594,300+$5,000+$407,401)

Therefore the net position section of Shelburne’of net position will be $1,006,701

5 0
2 years ago
Eppich Corporation has provided the following data for the most recent month: Raw materials, beginning balance $ 20,500 Work in
Nesterboy [21]

Answer:

Raw Materials T - Account

Debit  :

Beginning Balance                              $ 20,500

Raw materials purchases                     $ 79,100

Total                                                      $99,600

Credit :

Raw materials used in production      $ 77,900

Closing Balance                                   $ 21,700

Total                                                      $99,600

Overheads T - Account

<u>Debit  :</u>

Manufacturing overhead costs incurred   $ 92,500

Totals                                                           $ 92,500

<u>Credit :</u>

Manufacturing overhead applied               $ 72,800

Understatement of Overheads                   $ 19,700

Totals                                                           $ 92,500

Work In Process T - Account

Debit  :

Beginning Work In Process                      $ 32,800

Raw materials                                            $ 77,900

Direct Labor                                              $ 52,800

Manufacturing overhead applied            $ 72,800

Totals                                                        $236,300

Credit :

Transferred to Finished Goods              $ 190,000

Ending Work In Process                            $46,300

Totals                                                        $236,300

Finished Goods T - Account

<u>Debit :</u>

Beginning Balance                                    $ 50,800

Transferred from Work In Process          $ 190,000

Totals                                                         $240,800

<u>Credit :</u>

Trading Account                                       $ 221,700

Ending Balance                                           $ 19,100

Totals                                                         $240,800

Cost of Goods Sold = $241,400

Explanation:

Cost of Goods Sold = $ 221,700 + $ 19,700 (under-applied overheads)

                                 = $241,400

6 0
3 years ago
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