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enyata [817]
3 years ago
8

You are considering in investing one of the two options: Investment A requires a $255,000 upfront payment from you and generates

$21,000 revenue annually. Investment B requires an $175,000 upfront payment from you with annual gains of $29,000. After how many years would the total return from Investment A and B be equal?
a. 6
b. 8
c. 10
d. 12
e. Never
Business
1 answer:
Ainat [17]3 years ago
3 0

Answer:

Option (E) Never

Explanation:

NPV from Investment Project 1 = ($255,000) + $21,000 / (r)

NPV from Investment Project 2 = ($175,000) + $29,000 / (r)

The question says that find the number of years that equals the total return which means the NPV from both investments is equal:

($255,000) + $21,000 / (r) = ($175,000) + $29,000 / (r)

$21,000 / (r) - $29,000 / (r) = $255,000 - $175,000

-$8000 / r = $80,000

r = - 8000 / 80000 = -0.01 = - 10%

The negative sign shows that project A can not make a positive NPV that will be equal to that of project B and vice versa. It can also be illustrated by putting the value of r in "NPV from Investment Project 1"

NPV from Investment Project 1 = ($255,000) + 21000 / -0.01

= ($255,000) - $210,000 = ($465,000)

This shows that the company will have to make losses of $465,000 which is not possible because company will not select projects with negative NPVs.

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Wall Drugs offered an incentive stock option plan to its employees. On January 1, 2021, options were granted for 75,000 $1 par c
valkas [14]

Answer:

the total compensation cost is $75,000

Explanation:

The computation of the total compensation cost for this plan is shown below:

Total compensation cost = option granted × fair value of each option

total compensation cost = 75000 × $1

total compensation cost = $75,000

Here to determined the total compensation cost we simply multiplied the option granted with the fair value of each option so that the correct amount could come

Therefore the total compensation cost is $75,000

4 0
3 years ago
Diane's Designs has two classes of stock authorized: 8%, $10 par value preferred and $1 par value common. As of January 1, 2021,
devlian [24]

Answer:

Common stock = $210,000

Preferred stock = $15,000

Additional paid in capital = $2,801,000

Treasury stock  =    $120,000

Retained earnings = $31,600

Explanation:

Diane's Designs has two classes of stock authorized: 8%, $10 par value preferred and $1 par value common.

As of January 1, 2021, the following accounts had the following balances: Common Stock $10,000, preferred stock $5,000, retained earnings was $9,600.

The following transactions affect stockholders' equity during 2021, its first year of operations: January 1-Dec. 31 Net Income $25,000

January 1 Issue 200,000 shares of common stock for $15 per share.

JOURNAL ENTRIES

Dr. Bank.......................3,000,000

Cr. Common stock.......................200,000

Cr. Additional Paid-in capital..2,800,000

February 6 Issue 1,000 shares of preferred stock for $11 per share.

JOURNAL ENTRIES

Dr. Bank.......................11,000

Cr. Preferred stock.......................10,000

Cr. Additional Paid-in capital.......1,000

October 10 Purchase 10,000 shares of its own common stock for $18 per share.

JOURNAL ENTRIES

Dr. Treasury Stock.......................180,000

Cr. Bank........................................................180,000

November 12 Resell 5,000 shares of treasury stock at $20 per share.

JOURNAL ENTRIES

Dr. Bank..............60,000

Cr. Treasury Stock.......................60,000

December 31 Paid dividends of $3,000

The closing balances can be computed as beginning balances + changes in the year = closing balances:

Common stock = 10,000 + 200,000 = $210,000

Preferred stock =  5,000 + 10,000 =    $15,000

Additional paid in capital = 2,800,000 + 1,000 = $2,801,000

Treasury stock  = 180,000 - 60,000 = $120,000

Retained earnings 9,600 + 25,000 - 3,000 = $31,600

8 0
2 years ago
In order for the economy to be strong, individuals must?
liq [111]
Provide Labor And Buy Goods 
4 0
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Racz describes a micromanager as a manager who doesn't give you a lot of breathing room. Micromanagers often stifle workers and
marusya05 [52]

Answer:

core competency

Explanation:

A core competency is a concept in management theory introduced by C. K. Prahalad and Gary Hamel. It can be defined as "a harmonized combination of multiple resources and skills that distinguish a firm in the marketplace" and therefore are the foundation of companies' competitiveness.

4 0
3 years ago
During the final or phaseout stage of the project life-cycle, __________ is the dominant goal of many project managers.
Anarel [89]
During the final or phaseout stage of the project life-cycle, scope is the dominant goal of many project managers.
6 0
3 years ago
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