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3 years ago

Why must real options have positive value? (Select all the choices that apply.)

Business

1 answer:

yarga [219]3 years ago

5 0

Answer:

A. Real options must have positive value becasue they are only exercised when doing so would increase the value of the investment.

B. If exercisung the real option would reduce value, managers ca allow the option to go unexercised.

D, Having the real option but not the obligation to act is valuabale.

Explanation:

Because real option are options or choices made available to managers of a firm concerning investment their choices are meant to bring about a positive growth and return on the investments.

So if any of the choices presented to these managers are going to reduce the values or have other negative impacts on the investment and its value, then the option which is the real option or ideal option canbe forgone.

Cheers.

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Answer each of the following independent questions. Required: Alex Meir recently won a lottery and has the option of receiving o

Lady_Fox [76]

Answer:

option 1

$4,056,237.49

Explanation:

To determine the better option, we have to determine the present value of options 2 and 3

Present value is the sum of discounted cash flows

Present value can be calculated using a financial calculator

option 2

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Cash flow in year 1 to 6 = $9,300

I = 7 %

PV = 78,328.82

Option 2

Cash flow in year 1 to 6 = $$18,400

I = 7 %

PV = 87704.33

To find the NPV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

It is the first option that has the highest value

The formula for calculating future value = A / annuity factor

Annuity factor = {[(1+r) n] - 1} / r

P = Present value

R = interest rate

N = number of years

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3 years ago

Bissell Company received the following reports of its defined benefit pension plan for the current calendar year: PBO Plan asset

Vikentia [17]

Answer:

$210,000

Explanation:

Calculation to determine the pension expense for the year

Service cost $197,000

Interest cost $39,000

Less Expected return on plan assets ($26,000) ($260,000*10%)

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Therefore the pension expense for the year will be $210,000

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3 years ago

Which one of the following methods considers the time value of money in evaluating alternative capital expenditures?

Svet_ta [14]

Answer:

correct option is B. Net present value

Explanation:

solution

here time value of money in the evaluating of alternative capital expenditure is NPV ( Net present value )

and we know that NPV ( Net present value ) is calculated as the difference in between the cash inflow and the present value of the cash outflow ............1

so we can say correction option is B. Net present value

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4 years ago

On March 1, a designer received a check for $7,500 from a customer for services to be provided after the customer chose a color

lora16 [44]

Answer:

unearned service revenue 7,500 DEBIT

service revenue 7,500 CREDIT

Explanation:

the job is complete on July 31th

so <em>we write-off the unearned service reveue</em>

and <em>we recognize the service revenue </em>for the whole amount of the contract

The cash receipt occurs on March 1st so w edon't haveto post anythign related to cash on July 31th.

the unearned revenue account is used first because the business has the obligation of perform the job or return the cash. So it is a liablity until the job is completed

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4 years ago

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Deffense [45]

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3 years ago

Why must real options have positive​ value? ​(Select all the choices that​ apply.)

Why must real options have positive value? (Select all the choices that apply.)