A computer company has $3,000,000 in research and development costs. Before accounting for these costs, the net income of the co
1 answer:
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Answer:
The highest median income in purchasing power terms was in 1995, then 2005, 2015, and last 1985
Explanation:
To solve this question we must transform the median household income into comparable units. To do so we use the CPI data given in the problem.
We can arrange everything in a spreadsheet like the attached figure. In column A we have the years, in B the nominal median household income, in the third the CPI divided by 100, this will allow us to deflate and calculate the median income in constant 1982-1984 us dollars (since 1982-1984 will be the numeraire at 1). We do that by dividing column B by C, which is shown in column D.
With these values then we have all the median incomes in comparable units. We now can order and compare them
Answer:
The projects net present value = −$1,104,607
Explanation:
The net present value is the sum of the present values of all expected cash-flows from t=0 to t=n
The equal cash-flows of $500,000 expected at the end of each year from year 1 to year 5 are an annuity whose present value is calculated as follows:
PV of An Ordinary Annuity=
where PMT is the the equal payment cash inflow received at the end of each period
i is the project's cost of capital and
n is the number of periods making the annuity
Therefore: Net Present value of this investment given a 10% project cost of capital is calculated as follows:
NPV==-$1,104,606