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alex41 [277]
3 years ago
13

A firm is evaluating an investment proposal which has an initial investment of $5,000 and cash flows presently valued at $4,000.

the net present value of the investment is _________.
Business
1 answer:
Anni [7]3 years ago
6 0

Answer:

The net present value of the investment is -$1,000

Explanation:

Net present value method: In this method, the initial investment is subtracted from the discounted present value cash inflows. If the amount comes in positive than the project is beneficial for the company otherwise not.

The computation of the Net present value is shown below

= Present value of all yearly cash inflows after applying discount factor - initial investment

= $4,000 - $5,000

= -$1,000

Hence, this investment proposal should not be accepted as it has a negative value

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2 years ago
Locus Company has total fixed costs of $118,000. Its product sells for $55 per unit and variable costs amount to $39 per unit. N
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Answer:

8,850 units

Explanation:

We know that

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$23,600 = Unit sales × ($55 - $39) - $118,000

$23,600 = Unit sales × $16 - $118,000

$23,600 +$118,000 = $16 unit sales

So, unit sales = 8,850 units

The net income is computed below:

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= 20% × $118,000

= $23,600

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3 years ago
Best practice Performance Based Logistics (PBL) contracts often use some combination of carrots and stick strategies that are ti
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7 0
1 year ago
Exercise 5-8 Equivalent Units; Cost per Equivalent Unit; Assigning Costs to Units-Weighted-Average Method [LO5-2, LO5-3, LO5-4]
S_A_V [24]

Answer:

1. Calculate the first production department's equivalent units of production for materials and conversion for May.

  • materials = 275,000 + 50,000 = 325,000
  • conversion = 275,000 + 12,500 = 287,500

2. Compute the first production department's cost per equivalent unit for materials and conversion for May.

  • materials = $169,000 / 325,000 = $0.52
  • conversion = $253,000 / 287,500 = $0.88

3. Compute the first production department's cost of ending work in process inventory for materials, conversion, and in total for May.

  • materials = 50,000 x $0.52 = $26,000
  • conversion = 12,500 x $0.88 = $11,000
  • total = $37,000

4. Compute the first production department's cost of the units transferred to the next production department for materials, conversion, and in total for May.

  • materials = 275,000 x $0.52 = $143,000
  • conversion = 275,000 x $0.88 = $242,000
  • total = $385,000

Explanation:

Beginning WIP 70,000 units

materials $56,100

conversion $16,400

Ending WIP 50,000 units

100% completed for materials (50,000 EU)

25% completed for conversion (12,500 EU)

units started 255,000

total units transferred out 275,000

materials cost added during the period = $112,900

conversion cost added during the period = $236,600

7 0
3 years ago
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