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3 years ago

When comparing investment opportunities with approximately the same cost and risk level, choose the investment with the:

Business

1 answer:

Triss [41]3 years ago

3 0

Answer: highest positive net present value

Explanation:

Net present value is typically used by organizations in order to know the projects that will bring more profit to an organization.

Therefore, when comparing investment opportunities with approximately the same cost and risk level, choose the investment with the highest positive net present value.

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Oregon Outfitters issues 1,700 shares of $1 par value common stock at $20 per share. Later in the year, the company decides to p

lions [1.4K]

Answer and Explanation:

The journal entries are given below;

1. Cash Dr, $34,000 (1,700 × $20)

To Common Stock $1,700

To Paid in capital in excess of par-Common Stock $32,300

(Being issue of common stock is recorded)

2.Treasury stock Dr, $4,620 (220 × $21)

To Cash $4,620

(Being repurchase of treasury stock is recorded)

3. Cash Dr, $5,940 (220 × $27)

To Treasury stock $4,620 (220 × $21)

To Paid in capital-Treasury stock $1,320

(Being reissue of treasury stock is recorded)

7 0

3 years ago

Tin-Tin Waste Management, Inc., is growing rapidly. Dividends are expected to grow at rates of 30 percent, 35 percent, 25 percen

scoundrel [369]

Answer:

The dividend for the current year (D0) is $2.15.

Explanation:

This can be calculated as follows:

Current dividend = D0

Next dividend = (1 + relevant growth rate) * Current dividend ........... (1)

Based on equation (1), we have:

D1 = (1 + 0.30) * D0 = 1.30D0

D2 = (1 + 0.35) * D1 = 1.35 * 1.30D0 = (1.35 * 1.30)D0 = 1.755D0

D3 = (1 + 0.25) * D2 = 1.25 * 1.755D0 = (1.25 * 1.755)D0 = 2.19375D0

D4 = (1 + 0.18) * D3 = 1.18 * 2.19375D0 = (1.18 * 2.19375)D0 = 2.588625D0

D5 = (1 + 0.07) * D4 = 1.07 * 2.588625D0 = (1.07 * 2.588625)D0 = 2.76982875D0

Using Gordon Growth stable formula, we have price in year 4 (P4) as follows:

P4 = D5/(required rate of return - Perpetual dividend growth rate) ........ (2)

Substituting all the relevant values to equation (2), we have:

P4 = 2.76982875D0/(0.16 - 0.07)

P4 =2.76982875D0/0.09

P4 = 30.775875D0

Since the market price is the sum of all the present values of dividends from year 1 to 4 and P4, we have:

$47.85 = (D1 / (1 + required rate of return)^1) + (D2 / (1 + required rate of return)^2) + (D3 / (1 + required rate of return)^3) + (D4 / (1 + required rate of return)^4) + (P4 / (1 + required rate of return)^4) ...........(3)

Substituting all the relevant values to equation (3), we have:

$47.85 = (1.30D0 / 1.16^1) + (1.755D0 / 1.16^2) + (2.19375D0 / 1.16^3) + (2.588625D0 / 1.16^4) + (30.775875D0 / 1.16^4)

$47.85 = [(1.3 / 1.16^1) + (1.755 / 1.16^2) + (2.19375 / 1.16^3) + (2.588625 / 1.16^4) + (30.775875 / 1.16^4)]D0

$47.85 = 22.2572996535323D0

D0 = $47.85 / 22.2572996535323

D0 = $2.15

Therefore, the dividend for the current year (D0) is $2.15.

5 0

3 years ago

Services that specialize in intermodal shipping are known as intermodal marketing companies.

Semmy [17]

Answer:

I think it's true

explanation:

none

4 0

3 years ago

You can choose between Machine A or B. Your annual interest rate is 7%. You need a machine for 6 years (required service period)

dedylja [7]

Answer:

M1 EAC = 38,576.91

M2 EAC = 29,784.89

Explanation:

The equivalent annual cost is the PMT of the present worh of the machine/investment.

<em>Machine A</em>

54,000 at year 0 then 54,000 at beginning of year 4th

and 18,000 per year

We need to bering into present the 54,000 of the fourth year

the 18,000 are already split into each year.

$\frac{Maturity}{(1 + rate)^{time} } = PV$

Maturity 54,000

time 3 (it is done at the beginning of the 4th year not at the end of it)

rate 0.07

$\frac{54000}{(1 + 0.07)^{3} } = PV$

PV 44,080.09

54,000 + 44,080.09 = 98,080.09

Then we calculate the PMT

$PV \div \frac{1-(1+r)^{-time} }{rate} = C\\$

PV $98,080.09

time 6 years

rate 0.07

$98080.09 \div \frac{1-(1+0.07)^{-6} }{0.07} = C\\$

C $ 20,576.791

Now we add the annual cost of 18,000

getting 38,576.79 as annual equivalent cost ofr machine 1

<u>For machine B</u>

anual cost of 13,000

purchase of 92,000

and 18,000 salvage value at end of year 6:

$\frac{Maturity}{(1 + rate)^{time} } = PV$

Maturity 18,000.00

time 6.00

rate 0.07

$\frac{18000}{(1 + 0.07)^{6} } = PV$

PV 11,994.16

This is positive as is a cash inflow.

net worth: 92,000 - 11,994.16

net worth: 80.005,84‬

Now, we solve for PMT:

$80005.84 \div \frac{1-(1+0.07)^{-6} }{0.07} = C\\$

C $ 16,784.889

add the yearly maintenance cost of 13,000

Equivalent Annual Cost: 29,784.89

7 0

3 years ago

Shelly works as a call-center employee from inside her home. The company she works for does not mind that she works from home be

mariarad [96]

Answer:

Homesourcing

Explanation:

Based on the information provided within the question the fact that Shelly's job has been outsourced to her home is known as Homesourcing. Like mentioned in the question this is when company's outsource jobs to individuals allowing them to work from home. Company's do this for customer-contact jobs, like call centers, customer support, or even sales.

I hope this answered your question. If you have any more questions feel free to ask away at Brainly.

7 0

3 years ago