Ask question

Ask question

All categories

konstantin123 [22]

3 years ago

8

Pierce Chocolates and Berry Sweets both have new projects that require an initial investment of $450,000 and will have annual ca

sh inflows of $110,000. If Pierce expects its project to last 5 years and Berry expects its project to last 6 years, which one has the higher internal rate of return?

1 answer:

Rom4ik [11]3 years ago

6 0

Answer:

Explanation:

Using a financial calculator, input the following using the "CF" button;

<u>Pierce Chocolates has 5 years of cash inflows;</u>

Initial investment ; CF0 = - 450,000

Yr1 Cashflow; CF1 = 110,000

Yr2 Cashflow; CF2 = 110,000

Yr3 Cashflow; CF3 = 110,000

Yr4 Cashflow; CF4 = 110,000

Yr5 Cashflow; CF5 = 110,000

Then compute Internal rate of return; IRR CPT = 7.09%

<u>Berry Sweets has 6 years of cash inflows;</u>

Initial investment ; CF0 = - 450,000

Yr1 Cashflow; CF1 = 110,000

Yr2 Cashflow; CF2 = 110,000

Yr3 Cashflow; CF3 = 110,000

Yr4 Cashflow; CF4 = 110,000

Yr5 Cashflow; CF5 = 110,000

Yr6 Cashflow; CF6 = 110,000

Then compute Internal rate of return; IRR CPT = 12.18% hence higher.

You might be interested in

Companies Heidee and Leaudy are virtually identical in that they are both profitable, and they have the same total assets (TA),

Gemiola [76]

Answer:

Correct Answer:

e. Company Heidee has a higher ROE than Company Leaudy.

Explanation:

Return on Equity, (ROE) is a ratio that provides investors with insight into how efficiently a company and more specifically, its management team is handling the money that shareholders have contributed to it. That is, it measures the profitability of a corporation in relation to stockholders' equity.

<em>Company Heidee has the higher debt ratio shows that the ROE is very high. This shows that the investors money in Company Heidee is well managed in the business.</em>

3 0

3 years ago

According to the insurance research council, 14% of u.s. drivers are uninsured. a random sample of seven drivers was selected. w

navik [9.2K]

I think the answer is 0.0620

8 0

3 years ago

1. If a robber demands that you give him all your money, this is an example of

Kisachek [45]

1) Your answer will be a. Coercion
Coercion means the action or practice of persuading someone to do something by the use of force or threats. So here the robber is coercing you.
2) Your answer will be b. Monarchy
Denmark is ruled by Kings and Queens, which is so-called Monarchy
3) Your answer will be c. Republican Party

6 0

4 years ago

Read 2 more answers

What is management ?

kkurt [141]

Management is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively.

3 0

3 years ago

Stockbrokers who market their services with confidence that they can outperform the market average in picking stocks are especia

yawa3891 [41]

Answer:

e. appear credible to their customers.

Explanation:

Sarbanes-Oxley Act of 2002 is a legal framework which was passed by the 107th U.S Congress on the 30th of July, 2002. The law required that investment banking be completely made rid of research analysts who works at a broker-dealer firms, so that the analysts are not influenced to write favorable reports to enhance their potential investment banking businesses.

It is a law that imposes a stiffer penalty for any securities related law-break offence by accountants, auditors, etc., by mandating strict reforms to the existing securities regulations.

A stockbroker refers to an individual who is saddled with the responsibility of buying and selling stocks (shares) on a stock exchange market on behalf of his or her clients.

Stockbrokers who market their services with confidence that they can outperform the market average in picking stocks are especially likely to appear credible to their customers.

5 0

3 years ago