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zavuch27 [327]
3 years ago
14

Project Q has an initial cost of $257,412 and projected cash flows of $123,300 in Year 1 and $180,300 in Year 2. Project R has a

n initial cost of $345,000 and projected cash flows of $184,500 in Year 1 and $230,600 in Year 2. The discount rate is 12.2 percent and the projects are independent. Which project(s), if either, should be accepted based on its profitability index value?
a) Reject both Project Q and R

b) Accept Project R and reject Project Q

c) Accept either Project R or Project Q, but not both

d) Accept Project Q and reject Project R

e) Accept both Project Q and R
Business
1 answer:
ss7ja [257]3 years ago
8 0

Answer:

b) Accept Project R and reject Project Q

Explanation:

We can use the following method to solve the given problem in the question

We are given

Project Q: Initial Cost = $ 257,412

Projected Cash Flows: Yr 1 : $ 123,300 Yr 2 : $ 180,300

Total Present Value of all the Future Cash Flows using 12.2% as Rate of Return

= 123,300/1.122 + 180,300/(1.122*1.122)

= 109,893 + 143,222

= $ 253,115

Profitability Index = Total Present Values of all Cash Inflows / Initial Investment

= 253,115 / 257142 = 0.98

Since the Initial Investment is greater than the Present Value of Cash Inflows, that is, l Profitability Index < 0 the Project should not be selected.

Project R: Initial Cost = $ 345,000

Projected Cash Flows: Yr 1 : $ 184,500 Yr 2 : $ 230,600

Total Present Value of all the Future Cash Flows using 12.2% as Rate of Return

= 184,500/1.122 + 230,600/(1.122*1.122)

= 164,438.5 + 183,178

= $ 347,616.5

Profitability Index = Total Present Values of all Cash Inflows / Initial Investment

= 347,616.5 / 345,000 = 1.01

Since the Initial Investment is lower that the Present Value of the Cash Inflows, that is, Profitability Index > 0 the Project should be selected.

Accept Project R and Reject Project Q, so option B is the correct answer

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Swifty Corporation incurs the following costs to produce 9900 units of a subcomponent:
MrMuchimi

Answer:

The net income will increase by $6,712 if the subcomponent is purchased.

Explanation:

Giving the following information:

Swifty Corporation incurs the following costs to produce 9900 units of a subcomponent:

Direct materials $8316

Direct labor 11187

Variable overhead 12474

Fixed overhead 16200

Total cost= $48,177

An outside supplier has offered to sell Swifty the subcomponent for $2.85 a unit.

Swifty could avoid $3000 of fixed overhead by accepting the offer.

We need to calculate the total cost of buying the subcomponent:

Buy:

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3 years ago
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ipn [44]

Firms should emphasize the importance of consistently good customer service to its employees in order that good customer service becomes a part of the organizational culture.

Organizational culture is that the collection of values, expectations, and practices that guide and inform the actions of all team members. consider it because the collection of traits that make your company what it's. a good culture exemplifies positive traits that result in improved performance, while a dysfunctional company culture brings out qualities that may hinder even the foremost successful organizations. Organizational culture affects all aspects of your business, from punctuality and tone to contract terms and employee benefits. When workplace culture aligns together with your employees, they’re more likely to feel softer, supported, and valued. Companies that prioritize culture may also weather difficult times and changes within the business environment and are available out stronger.

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6 0
1 year ago
You are the owner of a shoe company. You learn that it would be cheaper
diamong [38]

Answer:

Being a businessman and being charitable at the same time is just next to impossible at the time of expanding one's firm.

Explanation:

A business person's main motive has to be his ability to expand, so that he reaches that particular stage to do some charity for his fellow citizens. If you look at the unemployment part, then you must know that every person is somehow talented and in countries like the US, no one lives unemployed.

Therefore, it is necessary for a business person to calculate the cost factors, that does not only include the cost of labors, but also the cost of exporting the materials to Bangladesh and the cost of importing the final products. Then he needs to compare the total cost making the shoes in Bangladesh with making them via the US labors, and then take the decision accordingly.

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3 years ago
Jim agrees orally with West Bank to guarantee a loan that West Bank will make to Susan to purchase an existing restaurant upon S
andrew-mc [135]

Answer: false

Explanation:

The statute of frauds requires some specific contracts types to be executed in writing. According to the statute, the contracts covered include agreements that involve goods worth over $500,

contracts for land sale, and also contracts that last for either one year or more.

Based on the scenario above, it is false as Jim's guaranty agreement with West Bank is enforceable under the Statute of Frauds

5 0
3 years ago
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tigry1 [53]

Answer:

concentrated demand

Explanation:

Business to business (B2B) salespeople have a very different job than regular salespeople, since every client matters and every client is VIP. B2B buyers know exactly what they want, and they will demand the best possible product at the least possible cost, specially if they are large corporations. The advantage of B2B sales is that one big sale can make a huge difference to your company and yourself. For example, companies that supply auto parts generally have only a few clients, since there are less than 10 car manufacturers in the US, but any sale involves millions of units.

7 0
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