Answer:
NPV = $39,230
Payback period = 3.64 years
Explanation:
The net present value (NPV) = (net annual cash flow x interest factor) - investment
NPV = ($110,000 x 3.993) - $400,000 = $439,230 - $400,000 = $39,230
The payback period = investment / net annual cash flow = $400,000 / $110,000 = 3.64 years or 3 years, 7 months and 19 days
You can also calculate the PV of each annual cash flow which will give you a more precise result, but the variation is minimal:
PV = ($110,000 / 1.08) + ($110,000 / 1.08²) + ($110,000 / 1.08³) + ($110,000 / 1.08⁴) + ($110,000 / 1.08⁵) = $439,198
and the NPV = $39,198
Answer:
Bill shouldnt trade movie tickets for basketball tickets, since MRS > Pb/Pm.
Explanation:
Price ratio = Pb/Pm
= $46/$10
= 4.6
MRS = 5/1
= 5
MRS > Pb/Pm
Therefore, Bill shouldnt trade movie tickets for basketball tickets, since MRS > Pb/Pm.
Answer:
The first investment is more profitable than the general market interest rate.
Explanation:
Giving the following information:
An investment will pay $202,000 at the end of next year for an investment of $182,000 at the start of the year. The market interest rate is 7.9% over the same period.
<u>To compare both options, we need to calculate the final value of investing the $182,000 in other investment that pays a 7.9% interest rate.</u>
We need to use the following formula:
FV= PV*(1+i)^n
FV= 182,000*(1.079)= $196,378
The first investment is more profitable than the general market interest rate.
The answer is wheat flour and gluten.
Answer:
At start = $20/share
At end = $21.384
Explanation:
DATA
ASSets at the start = $200m
Outstanding shares = 10m
Dividend income at the end = $2m
Gain in price = 8%
12b-1 fees = 1%
A.
Net assets at the start can be calculated by dividing assets at the start by outstanding shares
Net Assets value at start = Assets at start/Outstanding shares
Net Assets value at start = $200m/10m
Net Assets value at start = $20/share
Net Assets value at the end can be calculated by multiplying gain price with 12b-1 fees
Net assets value at the end = Gain Price x (1-12b-1 fees)
Net Assets value at the end = ($20x$1.08) x (1 - 0.01)
Net Assets value at the end = $21.6 x 0.99
Net Assets value at the end = $21.384