1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
emmainna [20.7K]
3 years ago
14

A business promises to pay the investor of $6000 today for a payment of $1500 in one year's time, $3000 in two years' time, and

$3000 in three years' time. What is the present value of this business opportunity if the interest rate is 6% per year
Business
2 answers:
barxatty [35]3 years ago
6 0

Answer:

NPV= 603.94

Explanation:

Giving the following information:

A business promises to pay the investor of $6000 today for a payment of $1500 in one year, $3000 in two years, and $3000 in three years.

We need to calculate the net present value using the following formula:

NPV= -Io + ∑[Cf/(1+i)^n]

Cf= cash flow

For example:

Year 2= 3,000/1.06^2= $2,669.99

NPV= 603.94

White raven [17]3 years ago
3 0

Answer:

The business sounds good as the net present value is positive.

NPV $603.94

Explanation:

we have to solve for the present value of the discount values of the cash flow:

PV = \frac{1500}{1+0.06} + \frac{3000}{(1+0.06)^2} +\frac{3000}{(1+0.06)^3}

PV = 6603.941509

Net present value

6,603.94 - 6,000 investment (amount borrowed to the business)

603.94

You might be interested in
Stormer Company reports the following amounts on its statement of cash flow: Net cash provided by operating activities was $30,5
DIA [1.3K]

Answer:

$38,500

Explanation:

Sheridan's ending cash balance can be calculated as;

= Beginning cash balance + cash provided by operating activities + cash provided by financing activities - cash used by investing activities

= $5,500 + $30,500 + $13,500 - $11,000

= $38,500

Therefore, the ending cash balance is $38,500

6 0
2 years ago
In the equation of exchange, M x V = P x Q, the P represents ___________________.
Bogdan [553]

Answer:

P in the equation represents Price level

Explanation:

The equation above is referred to as the equation of exchange.

M = money supply, V= velocity of money, P= price level and Q= real output (real GDP)

P × Q gives the nominal GDP while M×V is the effective money supply.

The total value of goods and services available in the economy (represented by the nominal GDP) is equals to the total amount of money available to purchase them (the effective money supply.

The velocity of money is the rate at which money been is used or spent for transaction purposes in the economy. It is assumed to be constant.

For example, If there exist only a $1000 note in the economy, this amount just needs to be spent once to purchase a total nominal GDP of $1000. However, if there exist just one $500 note, then it means the $500 will need to be spent 2 times to purchase the total value of goods worth $1000. The 2 is the velocity of money

This equation is also used to explain the concept of the quantity theory of money.

The theory states that if an economy is operating at the full employment level, an increase in money supply will not impact the real GDP rather it will drive up the price level up. This idea forms the basis of the position of some economists that money supply drives inflation

The assumptions of the theory are as follows:

The velocity of money is constant

The the economy is at the full employment output. This implies that the economy is using all of its productive resources efficiently

3 0
3 years ago
f pressure is put on the government to maintain a balanced budget during a recession. In this scenario, government would need to
Kitty [74]

Answer:

Increase

fall

Explanation:

A recession occurs when the gross domestic product of a country for two consecutive quarters is negative.

Annually balanced budget is a budget where at the end of every year, revenue must equal expenditure.

If in a recession, a government is under pressure to maintain a balanced budget, the government would need to increase taxes. this is because income would be less than government expenditure as a result of the recession. In order to maintain a balanced budget, the government can either increases taxes are reduce expenditure.

When taxes are increased, disposable income falls and this causes aggregate demand to fall

4 0
2 years ago
Who or what determines a country's GDP?
FromTheMoon [43]
Who i believ is the senator
8 0
3 years ago
Read 2 more answers
Linda sells 100 bottles of homemade ketchup for $10 each. The cost of the ingredients, the bottles, and the labels was $700. In
snow_lady [41]

her profit is 1000 while her economy is 1400

3 0
2 years ago
Other questions:
  • Hideki owns land with a huge number of trees on it. In order to protect the land, Hideki would like to remove some of the trees,
    12·1 answer
  • If a good is inferior, then an increase in income will result in a(n) a. increase in the demand for the good. b. decrease in the
    7·1 answer
  • This is not an effective use of wikis.
    11·2 answers
  • What is one of the largest contributors to health problems in low-income countries?
    7·1 answer
  • You are a sales manager for a car dealership who wants to effectively target potential customers. Write a paper that details how
    10·1 answer
  • If a 1 percent decrease in price results in less than a 1 percent increase in the quantity demanded, demand is Multiple Choice c
    11·1 answer
  • _______________________: Organization with facilities and other assets in at least one other country than its home country.
    15·1 answer
  • 3. What are three purchasing activities in businesses?
    15·1 answer
  • when commercial farming proposals have promised more jobs in zambia, why have there been job losses at the farm taken over by ch
    15·1 answer
  • two friends, alex and sam, go shopping. alex is thinking of purchasing a new shirt for $5 that has a "made in indonesia" tag on
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!