Answer:
year net cash flow
0 -$150,000
1 $80,000
2 $65,000
3 $50,000
4 $40,000
A) NPV = -$150,000 + ($80,000 x .87) + ($65,000 x .756) + ($50,000 x .658) + ($40,000 x .572) = -$150,000 + $69,600 + $49,140 + $32,900 + $22,880 = -$150,000 + $174,520 = $24,520
B) Yes , because the net present value indicates that the return on the proposal is greater than the minimum desired rate of return of 15%. Since the NPV is positive ($24,520), it means that the cash inflows are higher than the cash outflows when we use a 15% discount rate.
Answer:
a) Distinguish between the use of Franchising and Joint Venture as modes of entry into other countries by global businesses.
Franchising consists in the licensing of aspects of production and intellectual property to a another party: the franchise.
A Joint Venture is a business union between two or more parties, in which they split profit as well as costs and responsabilities.
b) What are the respective advantages and disadvantages of both strategies?
Franchising can be a quicker way to expand into foreign markets. The flexibility of the method, and the lower capital requirements are the reason why. This can be seen in the success that American fast-food brands have had using this method to expand in global markets.
A Joint-Venture can be more difficult to use for market expansion, however, it can be more profitable, because the profit will not be split among as many parties as in franchising, and more importantly, the firm maintains a higher control of the operation.
Answer:
A)) interest expense from loans to purchase corporate bonds and interest expense from loans to purchase stocks.
Explanation:
An investment interest expense can be regarded as any amount of interest which is been paid on proceeds of loan that is been used in purchasing investments or securities. investment interest expense can be regarded as been deductible under some particular circumstances.
It should be noted that investment interest expense include;
✓interest expense from loans to purchase corporate bonds
✓ interest expense from loans to purchase stocks.
Answer:
d) EPS cannot be calculated if a company has no preferred stock.
Explanation:
The above statement is untrue about E.P.S because the reason why 'Preferred dividend' (which is dividend on preference shares) is subtracted from Net Income, before being divided by the 'Average Number of Common Shares Outstanding' is for comparability.
Since the denominator is based on 'common shares' or 'ordinary shares', it makes sense not to include the part of income that has fallen to preferred shares.
As a matter of fact there are a lot of companies that do not have preferred stock and still report Earnings Per Share on their financial statements.
Finally, still on comparability; E.P.S helps to compare the performance of big companies that have preferred stock with small companies that do not have. Hence EPS can be calculated even when there is no preferred stock.
Sarah can best be labeled as living in <u>"relative"</u> poverty.
Relative poverty is the condition in which individuals do not have the base measure of salary required with a specific end goal to keep up the normal way of life in the general public in which they live. Relative neediness is viewed as the least demanding approach to quantify the level of destitution in an individual nation. Relative destitution is characterized with respect to the individuals from a general public and, in this manner, varies crosswise over nations. Individuals are said to be devastated on the off chance that they can't stay aware of the way of life as dictated by society.
