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malfutka [58]
3 years ago
9

Dip N’ Dunk Doughnuts has computed the net present value for capital expenditure at two locations. Relevant data related to the

computation are as follows: Fort Collins Boulder Total present value of net cash flow $607,600 $624,000 Amount to be invested (620,000) (600,000) Net present value $(12,400) $ 24,000 a. Determine the present value index for each proposal. Round your answer for the present value index to two decimal places. Fort Collins Boulder Total present value of net cash flow $ $ Amount to be invested $ $ Present value index b. Which location does your analysis support?
Business
1 answer:
Leviafan [203]3 years ago
4 0

Answer:

The correct answer for option (a)  0.98 and 1.04 and for option (b) is Boulder Location.

Explanation:

According to the scenario, computation of the given data are as follows:

A). We can calculate the present value index by using following formula:

Present value index = Total present value of net cash flow ÷ Amount to be invested  

Present value index Ft. Collins = 607,600 ÷ 620,000  = 0.98

Present value index Boulder = $624,000 ÷ $600,000  = 1.04

Fort Collins has 0.98 present value index and boulder has 1.04 present value index.

B). Boulder location should be chosen according to the analysis. Because boulder has the 1.04  present value index which is greater than 1 while fort Collins has value less than 1.

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AleksandrR [38]

Answer:

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3 years ago
"icrosoft announced a 2 for 1 stock split. Before the split they had 5.4b shares outstanding and par value was $0.0000125. Befor
aliina [53]

Answer: Balance before Split - $67,500

After Split No. of shares - 10.8 billion

After Split Par Value - $0.00000625

After Split Balance - $67,500

Explanation:

Microsoft had 5.4b shares outstanding and par value was $0.0000125.

Before the split the balance in the Common Stock account was:

We will multiply the no. Of shares outstanding by the par value.

= 5.4 billion * $0.0000125

= $67,500

After the split shares outstanding are (in billions):

The split was a 2 for 1 split meaning the shares doubled. That would mean,

= 5.4b * 2

= 10.8 billion shares outstanding

After the split par value is:

It was a 2 for 1 split. That would mean that prices had to have halved. Calculating therefore,

= $0.0000125/2

= $0.00000625

After the split the balance in Common Stock is

= 10.8 billion shares * $0.00000625

= $67,500

Balance remained the same showing that total equity remains the same. Only no of shares and price changes.

8 0
3 years ago
Read 2 more answers
Bethesda Biosys issues an IPO on a best-efforts basis. The company's investment bank requires a spread of 18 percent of the sell
Andrej [43]

Answer:

Bethesda Biosys

Issue of an IPO:

Net proceeds for the issuer is $82 million, if all the 4 million shares are bought by investors.

Explanation:

a) Calculations:

The spread is $4.5 (18% of $25) per share, since average selling price is $25.

Therefore, the net proceed per share is $20.50 ($25 - 4.50).

And the Total Net Proceeds = $82 million ($20.50 * 4 million), assuming that all four million shares were bought by the public.

Note that the question did not provide the necessary information to make the final decision.

b) During the issue of securities, especially an IPO, underwriters, such as investment banks, pay an issuing company for the securities and then sell the securities to the public.  There is always a difference per share price that they are willing to pay the issuer and what they will collect from the investing public.  That difference is called the underwriting spread or simply the spread.

c) Best-Efforts Basis: According to investopedia.com, underwriting on best-effort basis is "an agreement between an underwriter and an issuer in which the underwriter agrees to place as much of an offering with investors as possible, but is not responsible for any portion of the offering it fails to sell."

4 0
3 years ago
If you cause a car accident, which type of insurance will require you to pay the least out of pocket? AHigh deductible plan BLow
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3 years ago
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A project has cash flows of −$161,900, $60,800, $62,300, and $75,000 for Years 0 to 3, respectively. The required rate of return
Degger [83]

Answer:

Therefore, the internal rate of return is lower than the expected return, for this the project must be rejected

Explanation:

Solution

Given that

The cash flow of a project consists of the following amount from year 0 to 3 = −$161,900, $60,800, $62,300, and $75,000

The rate of return required = 13%

Now,

Let the Internal rate of return be y%

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At internal rate of return, the value of present inflows is the same as the value of present outflows.

So,

Internal rate of return = Value of present inflows = Value of present outflows

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Therefore, y = internal rate of return 10.41%

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3 years ago
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