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3 years ago

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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The price elasticity of a good will tend to be larger:a)the longer the relevant time period. b)the fewer number of substitute go

Butoxors [25]

The price elasticity of a good will tend to be larger if the fewer number of substitute goods will be available.

The cross elasticity of demand for substitute goods is always positive because the demand of one good increases at the time when the price for the substitute good increases however the cross elasticity of demand for complementary goods is always negative.

For example, if the price of coffee rises, the quantity demanded for tea which is the best substitute of coffee beverage will increase as consumers will switch to a less expensive but the substitutable alternative.

This is reflected in the cross elasticity of the demand formula, as both the numerator which is the percentage change in the demand of tea and denominator which is the price of coffee shows a positive increase.

To know more about price elasticity of demand here:

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7 0

2 years ago

What type of tax system does the United States have

Aleksandr-060686 [28]

The overall system of taxation in the United States is progressive.

5 0

3 years ago

Read 2 more answers

Pasadena Candle Inc. budgeted production of 730,000 candles for the January. Wax is required to produce a candle. Assume 13 ounc

Olin [163]

Answer:

Direct material budget (in pounds)= 588,125

Direct material budget ($)= $941,000

Explanation:

Giving the following information:

Production= 730,000 candles

Direct material required for each unit:

13 ounces of wax

The estimated January 1 wax inventory is 18,600 pounds.

The desired January 31 wax inventory is 13,600 pounds.

Candle wax costs $1.60 per pound.

The direct material purchases are determined by the production requirements, the beginning inventory, and the ending inventory.

First, we need to calculate the amount of wax for the period:

Production= 730,000 candles*13 ounces= 9,490,000 ounces

In pounds= 9,490,000/16= 593,125 pounds.

Direct material budget (in pounds)= Production for the month + ending inventory - beginning inventory

Direct material budget (in pounds)= 593,125 + 13,600 - 18,600= 588,125

Direct material budget ($)= 588,125*1.6= $941,000

5 0

3 years ago

BE9.5 (LO 3), AP For Gundy Company, units to be produced are 5,000 in quarter 1 and 7,000 in quarter 2. It takes 1.6 hours to ma

azamat

Answer:

The correct answer for quarter 1 is $120,000, for quarter 2 is $168,000 and for 6 months is $288,000.

Explanation:

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

Direct labor cost for Quarter 1 = Total Required Direct Labor Hours × Direct Labor Wage

Where, Total Required Direct Labor Hours = 5,000 × 1.6 hours = 8,000 hours

So, Direct labor budget for Quarter 1 = 8,000 × $15 = $120,000

Direct labor budget for Quarter 2 = Total Required Direct Labor Hours × Direct Labor Wage

Where, Total Required Direct Labor Hours = 7,000 × 1.6 hours = 11,200 hours

So, Direct labor budget for Quarter 2 = 11,200 × $15 = $168,000

So, Direct labor budget for 6 months = Direct labor budget for Quarter 1 + Direct labor budget for Quarter 2

= $120,000 + $168,000

= $288,000.

5 0

3 years ago

Which of the following do not apply to unearned revenues?

Lelechka [254]

Answer: Option D

Explanation: In simple words, unearned revenue refers to the liability account that depicts the cash that is received in the current for the supply of good or service that will be made in some future period.

For example- a door to door newspaper seller taking advance subscription fees for one year or any event organizing committee taking advance money for tickets of a concert that will happen in the future.

Such incomes can only be recognized when the intended service is completed for the customer.

6 0

3 years ago