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BlackZzzverrR [31]
3 years ago
12

When choosing between mutually exclusive projects, what is the best method to use?

Business
1 answer:
KIM [24]3 years ago
7 0

Answer:

Option C. The highest NPV is always the best option.

Explanation:

The reason is that IRR assumes that the reinvestment rate is also at IRR which is not a realistic assumption. The Net Present Value resolves this as it assumes that the reinvestment rate is cost of capital and hence is more better than IRR to appraise the project.

The decision rule in the Net present value method is that the project which has higher positive Net present value is regarded as best project among two mutually exclusive projects.

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Which of the following two methods are typically used for initial screening of​ investments, rather than for​ detailed, in-depth
OLga [1]

Answer:

A. payback and accounting rate of return

Explanation:

  • The initial screen is a practice method of excluding the investments form the portfolio basis on the social environment and governance and the screening is mot applicable to the investments.
  • Such as the mutual funds and the privately co-mingled funds. A positive screening means to exclude the companies that are environmental friendly have a socially responsible business practice.
4 0
3 years ago
“A business organization requires both long term and short term capital which can
Anna007 [38]
The example of ownership capital is : Shares

Shares determine that you have a part of percentage of the company (you will also get part of its income)

Example of Borrowed capital is : Leasing.
Leasing is a rental agreement in which you can borrow goods that you can use for your production process

hope this helps
5 0
3 years ago
Cragmont has beginning equity of $277,000, net income of $63,000, withdrawals of $25,000 and no additional investments by owners
Andrew [12]
<span>The ending equity is $315,000 This is just a matter of adding income and subtracting withdraws. So let's do it. "Cragmont has beginning equity of $277,000," x = $277000 "net income of $63,000" x = $277000 + $63000 = $340000 "withdrawals of $25,000" x = $340000 - $25000 = $315000</span>
3 0
3 years ago
Blink, Inc. has 1,000 shares of $10 par, 5% preferred stock, and 20,000 shares of $10 par common stock issued and outstanding. I
monitta

Answer:

The answer is : The payment to common shareholders will total $19,500

Explanation:

Because preferred share has priority to receive dividend over common shares, the amount of dividend declaration must fulfill the firm's commitment to its preferred shareholders before the residual amount may be distributed among common shareholders.

Amount of dividend needs to be paid to preferred share holders = Number of share x Par value per preferred share x % dividend = 1,000 x 10 x 5% = $500.

The residual amount of dividend declaration which will go to common shareholders = 20,000 - 500 = $19,500.

=> Thus, the answer is $19,500.

6 0
2 years ago
Dorcan Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for $7.6
storchak [24]

Answer:

b. 18,602 units.

Explanation:

First, we need to use last year's information to determine last year's fixed costs.

Price (P1) = $7.68

Variable costs (VC1) = $2.25

Units sold to break-even (n1) = 21,800

At the break-even point, net income is zero and the fixed cost can be found by:

N=0 = n_1*(P_1-VC_1) -FC_1\\0=21,800*(\$7.68-\$2.25) - FC_1\\FC = \$118,374

With information from last, information for the current year can be determined:

Price (P2) = $10.00

Variable costs (VC2) = $2.25 x 1.3333 = $3.00

Fixed cost (FC2) = $118,374 x 1.10 = $130,211.4

The number of units required to break even is:

N=0 = n_2*(P_2-VC_2) -FC_2\\0=n_2*(\$10-\$3) - \$130,211.4\\n_2 = 18,601.63\ units

Rounding up to the nearest whole unit, Dorcan Corporation must sell 18,602 units to break-even.

7 0
3 years ago
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