Answer:
b.The IRR is equal to 25.85%
Explanation:
Firstly we are given that i consider investing $100000 which will in this problem be our Cinitial which is the initial investment for the project.
Then now given the risk of this project, my cost of capital is 20% so then we will compare this to the IRR and see if i can accept the project or not if the cost of capital is greater than the IRR than its not good to invest on the project but if the cost of capital is less than the IRR then the this will be a good investment as the cost of capital also checks the opportunity cost.
The future payment cash flows which is $500000 so we will use the following formula:
NPV = (cash flow)/(1+IRR)^n - initial investment
so we find the present value of the cash flow of the investment and subract the initial investment which will give us a zero cause the present value of the cash flow is equal to the initial investment therefore( n is the period of cash flows):
0= $500000/(1+IRR)^7 - $100000 transpose the initial investment and solve for IRR.
$100000(1+IRR)^7= $500000 then divide both sides by $100000
(1+IRR)^7 = 5 then find the 7nth root of both sides to eliminate the exponent of 7
1+ IRR = ![\sqrt[7]{5}](https://tex.z-dn.net/?f=%5Csqrt%5B7%5D%7B5%7D)
1+IRR = 1.258498951 then subtract 1 both sides to solve for IRR
IRR = 0.258498... then multiply by 100 as IRR is a percentage
IRR= 25.85 % rounded off to two decimal places which is the answer b
<h2>The first three options are right</h2>
Explanation:
Exchange rate:
- The "price or value of one country's currency" is exchanged for the price of "another country's currency value".
- The exchange rate always varies. It gets updated everyday.
- Exchange rates are calculated based on the value of "interest rate, trade, inflation, growth rate, employment and geopolitical conditions".
- There are two ways in which currency value is determined. A floating value is identified by the open market.
- We must travel to another country when we need more exchange rates.
Answer:the machine’s second-year depreciation and year end book value under the straight-line method is $3,990 and$40,420 respectively.
Explanation:
Straight line depreciation is calculated as
Depreciation= Initial value – salvage value / useful life
Depreciation=($48,400- $9,000)/10=$3,990
The depreciation expense each year would be $3990
Book value = Cost of asset- accumulated deprecation
Book value = Cost of asset - (2 years x depreciation)
= $48,400- (2 x $3,990)
= $40,420
Therefore, the machine’s second-year depreciation and year end book value under the straight-line method is $3,990 and$40,420 respectively.
Answer:
firm must borrow $288000 to achieve the target debt ratio
Explanation:
given data
assets = $720,000
debt to total capital ratio = 40%
to find out
How much must the firm borrow to achieve the target debt ratio
solution
we get here debt here by Debt to Total capital ratio that is express as
Debt to Total capital ratio = Debt ÷ ( Debt + Equity ) ....................1
put here value we get debt
0.40 = 
debt = $288000
so firm must borrow $288000 to achieve the target debt ratio
