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Marat540 [252]
3 years ago
13

An investor is deciding between two projects, both of which have an initial cost of £5,000. One project will return £10,000 in t

hree years with a 5% discount rate and the other project will return £9,500 in two years with a 3% discount rate. The investor determines the first project is worth £8,638 today, whereas the second project is worth £8,955 today, and he determines to invest in the second project. In deciding between the projects, the investor is most likely using the:
Business
1 answer:
snow_lady [41]3 years ago
5 0

Answer:

The answer is: The net present value of the investments

Explanation:

The net present value calculates the current monetary value of a project's future cash flows, using a discount rate. You must remember that $1 today is worth more $1 in the future.

When deciding what projects should be financed, an investor will always look for projects with a NPV ≥ 0, and if he has to decide between two projects, the he will probably choose the project with the highest NPV.

The easiest way to calculate the net present value is to use an excel spreadsheet and the NPV function:

=NPV(rate,value 1, value 2,... value n)

You might be interested in
A firm produces bicycles using two inputs: bicycle frames (F) and bicycle wheels (W). By definition, one bicycle has 2 wheels an
grin007 [14]

Answer:

C(100) = (75 x 100) + (200 x 100) = $27,500

Explanation:

the initial cost function of producing bikes is:

C(x) = 75F + 100W

the initial cost to produce 1 bike = $75 + $100 = $175

if the cost of wheels increase to $100 each, then the cost function is:

C(x) = 75F + 200W

in this case, there is not much to calculate since every bicycle must have 1 frame and 2 wheels, that means that in order to produce 100 bicycles you will necessarily need 100 frames and 200 wheels. Labor is not considered in this cost function, so any cost minimization strategy is limited to using the minimum amount of parts:

C(100) = (75 x 100) + (200 x 100) = $27,500

7 0
3 years ago
A minor explosion occurs at the chemical processing plant of Clement Inc. In order to study the situation and make recommendatio
Dominik [7]

Answer:

A. Safety engineers

Explanation:

Safety engineers are engineers who combine both health and safety in measures while developing procedures and systems with the aim of safeguarding and protecting people from getting injury and illness in the work place or environment. Their job description involves analyzing reasons for accidents, identifying potential hazards, suggesting procedures that can be taken by personnel in that workplace to protect themselves from harm and also preventing the occurence of accidents by bringing in accident proof systems of operations.

4 0
3 years ago
Choose the correct category for the items from Sun Company's perspective.
olga nikolaevna [1]

Answer:

a. Land purchased by Sun Company from a local finance company

1) REAL ASSETS, the land exists as a physical asset regardless of the company's transaction.

b. Sun Company's administration building, which houses the finance department

1) REAL ASSETS, the building exists as a physical asset regardless of the company's transaction.

c. Sun Company's inventories of raw materials

1) REAL ASSETS, the inventories exists as a physical asset regardless of the company's transaction.

d. Accounts receivable: money owed to Sun Company by other companies who have purchased products on credits

2) FINANCIAL ASSETS, accounts receivable is a financial concept, not a physical asset

e. Sun Company's corporate checking accounts

2) FINANCIAL ASSETS, checks is a financial concept that represent money, not a physical asset

3 0
2 years ago
6. Twins Barbara and Mary are both age 27. Beginning at age 27, Barbara invests $2,000 per year for 10 years and then never sets
Dmitriy789 [7]

Answer:

Barbara will have $210,349

Mary will have $188,922

Explanation:

Total time of investment is 40 years = age 67 - age 27

After 10 years, Barbara will have  $27,633 (this figure used "FV" calculation in excel = FV(7%,10,2000)

Then Barbara put all $27,633 in next 30 years then she will have $210,349 = 27,633 x (1+7%)^30

Mary didn't now invest in first 10 years, but then  invests $2,000 per year for the next 30 years, so she will have $188,922 = FV(7%,30,2000)

4 0
3 years ago
Nipurna is a high school guidance counselor. Nipurna is well liked by the staff and students whom she supervises. She recognizes
Mnenie [13.5K]

Answer:

It would appear that she develops a participatory leadership or management.

Explanation:

"Theory Y managers have an optimistic, positive opinion of their people, and they use a decentralized, participative management style. This encourages a more collaborative, trust-based  relationship between managers and their team members.

People have greater responsibility, and managers encourage them to develop their skills and suggest improvements. Appraisals are regular but, unlike in Theory X [authoritative] organizations, they are used to encourage open communication rather than control staff."

Reference: Mind Tools Content Team. “Theory X and Theory Y: Understanding People's Motivations.” Team Management Training from MindTools.com, 2019.

3 0
3 years ago
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