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3241004551 [841]
3 years ago
15

Suppose you operate a coal power plant and is considering upgrading the flue gas desulphurisation (FGD) facility (or "scrubbers"

) to reduce sulphur dioxide emissions. A contractor says their new system will cost $5000 per year to operate. Calculate, to the nearest dollar, the present value of the operational costs for the next four years. Assume a discount rate of 2%.
Business
1 answer:
Novosadov [1.4K]3 years ago
4 0

Answer:

The present value is   $19,039

Explanation:

The computation of the Present value is shown below

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

The discount factor should be computed by

= 1 ÷ (1 + rate) ^ years

where,  

rate is 2%  

Year = 0,1,2,3,4 and so on

Discount Factor:

For Year 1 = 1 ÷ 1.02^1 = 0.9804

For Year 2 = 1 ÷ 1.02^2 = 0.9612

For Year 3 = 1 ÷ 1.02^3 = 0.9423

For Year 4 = 1 ÷ 1.02^4 = 0.9238

So, the calculation of a Present value of all yearly cash inflows are shown below

= (Year 1 cash inflow × Present Factor of Year 1) + (Year 2 cash inflow × Present Factor of Year 2) + (Year 3 cash inflow × Present Factor of Year 3) + (Year 4 cash inflow × Present Factor of Year 4)

= ($5,000 × 0.9804) + ($5,000 × 0.9612) + ($5,000 × 0.9423) + ($5,000 × 0.9238)

= $4,901.96  + $4,805.84  + $4,711.61  + $4,619.23

=  $19,039

We take the first four digits of the discount factor.  

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Jim has part ownership in a house. He has decided to sell his interest. He signs an agreement with a local real estate designate
Scilla [17]

Answer:

joint tenant

Explanation:

Based on the information provided within the question it seems that Jim is most likely holding his part ownership as joint tenant. This is a unique type of ownership in which more than one individual share ownership of a property. These individuals share the exact same amount of rights to do with the property as they wish. Which is why Jim was able to sign away his part of the ownership without informing the other owners.

3 0
3 years ago
The internal financial statements of Vera Incorporated show that their beaded purses incurred an operating loss in the most rece
brilliants [131]

Answer:

Vera Incorporated

Change in annual operating income from discontinued business:

Annual Operating Income would reduce by $78,000.

Explanation:

a) Calculation of the Net Income Lost:

Loss of Contribution        ($99,000)

Avoidable fixed cost          $21,000

Reduction of Income       ($78,000)

b) The line of purses contributes $80,000 towards the company's fixed cost.  Therefore, discontinuing this line of business would lead to the loss of this steam of income.  The amount of reduced operating income will be $78,000 ($80,000 - 2,000).

4 0
3 years ago
Last year, The Pizza Joint added $6,230 to retained earnings from sales of $104,650. The company had costs of $87,300, dividends
Dmitrij [34]

Answer:

$2,503 = Depreciation Expense

Explanation:

Net profit = $6,230 that is amount added to retained earnings.

Net profit = Sales - Cost - Depreciation - Interest - Taxes - Dividends

Sales = $104,650

Costs = $87,300

Interest = $1,620

Earnings before depreciation and taxes = $104,650 - $87,300 - $1,620 =  $15,730

Earnings after interest depreciation and taxes = $6,230 + $2,500 = Net profit + Dividend = $8,730

Therefore

(15,730 - Depreciation) - (15,730 - Depreciation) \times 34% = $8,730

$15,730 - Depreciation - ($5,348 - 0.34 Dep) = $8,730

$10,382 - 0.66 Depreciation = $8,730

$1,652 = 0.66 Depreciation

$2,503 = Depreciation Expense

7 0
3 years ago
The performance of personal and business investments is measured as a percentage called "return on investment." What type of var
emmainna [20.7K]

Answer:

ROI (Return on Investment) measures the gain or loss generated on an investment relative to the amount of money invested.

Explanation:

ROI = (Net Profit / Cost of Investment) x 100

Example: Investment = $100 Net Profit: $30

ROI : (30/100) x 100 =  30%

4 0
3 years ago
Bond Yields and Rates of Return A 30-year, 10% semiannual coupon bond with a par value of $1,000 may be called in 4 years at a c
Nookie1986 [14]

Answer:

The bond's yield to maturity is 9.45% using Excel to get exact values, and 9.59% using approximate method.

Explanation:

We can calculate is using 2 ways, using Excel to get the exact percentage or with approximate methods, calculating the semi-annual Yield to Maturity using the following formula

YTM_{sm} =\cfrac{PMT+\cfrac{FV-PV}n}{\cfrac{FV+PV}2}

And from there we can calculate the Yield to Maturity just by multiplying the semi-annual one by 2.

Identifying the given information.

We have a period of 30 years, so for the semiannual bond we have n=2(30) = 60 periods.

The face value, FV, is $1000, the coupon rate is 0.10, thus we can use them to  find the interest per period PMT.

PMT=0.10 \times \cfrac{1000}{2}\\PMT=\$ 50

The current price of the bond, PV is $1050.

Replacing the values on the semiannual Yield to Maturity

YTM_{sm} =\cfrac{PMT+\cfrac{FV-PV}n}{\cfrac{FV+PV}2}

YTM_{sm}=\cfrac{50+\cfrac{1000-1050}{60}}{\cfrac{1000+1050}{2}}

Simplifying we get

YTM_{sm}=4.797\%\\

Finding the Yield to Maturity.

We can just multiply by 2 to get the Yield to Maturity from our previous result and rounding it to 2 decimals we get

YTM = 2 YTM_{sm}\\YTM=9.59\%

Alternatively we can use Excel and write:

RATE(n, PMT, PV, FV)*2

That is

RATE(60,50,1050,1000)*2

And we will get the exact Yield to maturity 9.49%

3 0
3 years ago
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