Answer:
Multiple IRRs:
Said another way, Multiple IRRs occur when a project has more than one <em>internal rate of return.</em> The problem arises where a project has non-normal cash flow (non-conventional cash flow pattern).
Internal rate of return (IRR) is one of the most commonly used capital budgeting tools. Investors make decisions by comparing the IRR of the project under consideration with the <em>hurdle rate</em>. If the IRR is greater than the hurdle rate, the project is accepted, otherwise it is rejected. When there are more than two IRRs, it is not exactly clear which IRR to compare with the hurdle rate.
Hurdle rate is the minimum required rate of return which businesses use as a benchmark to decide whether to invest in a project or not.
<em>So a typical situation which can generate negative cashflows which can in turn lead to multiple IRRs towards the end of the project is where the conditions of investment become adverse towards the end of the project.</em>
Imagine that toward the end of the lifecycle of a project, a forecasted increase external costs such as Interest Rate, influenced by government policies translates to an erosion of the bottom line generated by the business in that year.
Period 0 1 3 3 4 5
Unconventional cash flows ($)-19,000 16,000 16,000 6,000 6,000 -52,000
The series is non-conventional cash-flow pattern, which has two sign changes. This is the range in which the net present value of the non-conventional cash flow series is positive. The multiple IRR problem poses a series problem to analysts because the decision is not obvious.
Cheers!
Answer:
A.Incremental income(loss)
Sales as scrap $39,000
Rework $41,600
B.The company should REWORK
Explanation:
A. Sales as Scrap Rework
Sales of scrap units ($13,000×3.00)
$39,000
Sales of rework units ($13,000×8.20)
$106,600
Cost to rework units($13,000×5.00) $65,000
Incremental income(loss)
$39,000 $41,600
B.Therefore the company should REWORK
($106,600-$65,000)
=$41,600
<span>The most probable thing that will happen if the pie maker keeps making additional pies is this: the marginal costs will continue to rise, increasing the total cost, while the marginal revenue remains the same, decreasing the profit. This is to assume that no buyer is interested in purchasing the pies at a certain period of time. </span>
Answer:
Results are below.
Explanation:
<u>Giving the following information:</u>
Selling and administrative expense $90,000
Depreciation expense 75,000
Sales 621,000
Interest expense 46,000
Cost of goods sold 231,000
Taxes 50,000
<u>With the information listed above, we need to make an income statement following the structure below:</u>
<u></u>
Sales= 621,000
COGS= (231,000)
Gross profit= 390,000
Selling and administrative expense= (90,000)
Depreciation expense= (75,000)
Interest expense= (46,000)
Eearning before taxes (EBT)= 179,000
Taxes= (50,000)
Net operating income= 129,000
Answer:
The correct answer is C. Is top management committed to the study?
Explanation:
Market research is the process that includes the actions of identification, collection, analysis and dissemination of information with the purpose of improving marketing decision making. Its implementation occurs basically for two reasons:
1. to solve problems, for example, determine the potential of a market.
2. to identify problems, for example, to know why a product does not have the expected consumption. In essence, it seeks to meet the customer thus complying with the first premise of marketing.
That is why managers and researchers continually focus on the search for those practices that will allow them to improve the organization and direction of their processes and therefore increase their likelihood of success.
