Answer:
A. A saver makes a deposit in a credit union, and the credit union makes a loan to a member for a new car.
Explanation:
A financial intermediation is when an institution acts as the joint-point between two parties in a financial transaction. This means, lender and borrowers, and buyer and seller.
The saver deposit in the credit union. (lender)
And the financial intermediate give a loan to a member (borrower)
This spread the risk and makes transaction more easy, as both parties deal with the credit union, not with themselves.
The credit union faces and assumes obligation with both:
for the saver to give the deposit
and with the borrower that if it meets the requirement will receive the cash for the car and will return in a pre-arrenged method with a given interest and time defined.
Answer:
The correct option is (D)
Explanation:
Using the accumulated cash flow sign test,
- This investment is a non-simple investment.
This is because the net cash flow changes sign (to positive and back to negative) more than once, during the study period.
- There are at most 3 i* values. That is values for Internal Rate of Return. This is owing to the multiple change in sign during the period.
The correct answer is option D - Non simple investment with at most 3 values for internal rate of return (i*)
This is the concept of opportunity cost. If Brad puts money for a club, then he gives up the choice to buy the car, which may lead him to not be able to buy the car anymore.
Answer:
<em>c. $(265,460)</em>
Explanation:
The net present value of Project A shall be determined as needed.
The cash inflow of 31 December 2015 is five years from the current cash outflow and the net present value method uses the 18 per cent capital cost of the company.
The current value factor for 18 percent for 5 years is.4371, and $7.400,000 times.4371 is equivalent to $3.234.540, which is $265.460 lower than the current cash outflow of $3.5 million.
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