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My name is Ann [436]
3 years ago
5

Choose the most accurate​ statement: If these projects are mutually exclusive​, which project should be chosen by the CEO of the

firm if the​ CEO’s primary objective is to maximize shareholder​ value? Assume the opportunity cost of capital is​ 10% for both projects

Business
1 answer:
serg [7]3 years ago
3 0

Answer:

Project A is the better option than Project B.

Explanation:

The NPV of the project will decide which is the option with greater value to shareholders. As we can see that the NPV of Project A at 10% cost of capital is greater than the NPV of Project B at the same 10% cost of capital. So the best option here is Project A as is more in value than project B. Hence the CEO must select Project A.

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Margarite's Enterprises is considering a new project that will require $345,000 for new fixed assets, $160,000 for inventory, an
atroni [7]

Answer:

NPV = (53,222.44)

Explanation:

Net fixed asset                              345,000

Working capital

160,000 inventory + 35,000 Ar =   195,000

short term deb                                 (110,000)

net working capital                           85,000

Total investment                            430,000

salvage value 345,00 x 25% = 86,250

release of the working capital  85,000

Cash flow at end of project      171,250

annual cash flow

sales             550,000

cost              (430,000)

depreciation    69,000

EBT                   51,000

tax expense 35%

                        (17,850)

net income       33,150

+ dep                 69,000

cash flow           102,150

Now we calculate the present value of the net cash flow and the present alue fothe end of the project

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C 102150

time 4

rate 0.15

102150 \times \frac{1-(1+0.15)^{-4} }{0.15} = PV\\

PV $291,636.04

\frac{Principal}{(1 + rate)^{time} } = PV  

Principla (sum of salvage and released Working capital   171,250.00

time   5.00

rate   0.15

\frac{171250}{(1 + 0.15)^{5} } = PV  

PV   85,141.52

NPV = 291,636.04 + 85,141.52 - 430,000 = (53,222.44)

6 0
3 years ago
In a repeated​ game, deterring entry A. is not a rational strategy if money is lost fighting the first potential entrant. B. can
sertanlavr [38]

Answer:

D. May require losing money fighting the first potential entrant.

Explanation:

In this form of gaming, or in this game theory, it is said to be played over and over and could possible be in a probability form that is why that possibly, as a player, you may require loosing money fighting the first potential entrant.

Fighting the first entrant, possibility of cooperating means that their could be a possible compromise in order to carry on accepting a payoff over a certain period of time, knowing that if we do not uphold our end of the deal, our opponent may decide not to either.

3 0
3 years ago
What is one advantage corporations have over other types of businesses?
mote1985 [20]

Answer:D . Corporations have a nearly unlimited life span .

Explanation: just took apex test

3 0
3 years ago
The person who assists a corporation with real estate investments, usually as an employee and not an independent contractor, is
kakasveta [241]

Answer:

Explanation:  i am not fully sure ,but do your best

8 0
2 years ago
Brad is listening to a speaker explain how some new computer software works so Brad can use it in his business. According to you
Gnom [1K]

Answer:

comprehensive

Explanation:

Comprehensive listening refers basically to interpreting the meaning of the words that you are reading. I guess most reading should be considered comprehensive, or at least I hope so. It involves trying to understand the message that is written and that includes the basic ideas or concepts.  

7 0
3 years ago
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