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Travka [436]
3 years ago
8

SAP Inc. received a $1.5 million grant under its Small Business Innovation program. SAP invested the grant money and developed a

system to remove metal contaminants from storm water in shipyards. The firm estimates that each shipyard spends $500,000 a year on storm water clean-up efforts. If SAP is able to sign up and retain four shipyards in the first year onwards, what is the present value (PV) of the project (net of investment) if the cost of capital for SAP is 14% per year? Assume a cost of operations and other costs for SAP equal 50% of revenue.A) $4.80 million
B) $5.64 million
C) $4.51 millionD) $5.93 million
Business
1 answer:
MrRa [10]3 years ago
7 0

Answer:

B) $5.64 million

Explanation:

SAP inc can receive $500,000/ shipyard and 4 shipyards a year yields gross cash flows of  500*4 = $2,000,000. Half of these are costs that give us a Net cash flow of $1,000,000/ year.

Since there is no maturity of the project we calculate present value of cash flow with the following formula

PV of cash flow = 1,000,000/0.14 = $7.14 million rounded off

NPV = 7.14-1.5 = 5.64 million

Hope that helps.

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If a regulatory commission wants to provide a natural monopoly with a fair return, it should establish a price that is equal to
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Answer:

B. average total cost

Explanation:

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The average total cost also determines the cost per unit for a product.

It helps in deciding the selling cost of the product for a specified profit margin.

5 0
3 years ago
On february 28th of 1986, _____________ starts her first solo world tour, starpeace, planning both u.s. and european dates. due
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Chubbs Inc.’s manufacturing overhead budget for the first quarter of 2017 contained the following data.
r-ruslan [8.4K]

Explanation:

a. Manufacturing overhead Flexible budget report

                                Budget      Actual      Favorable (Unfavorable)

Variable cost          

Indirect material      $11,100      $14,900     $3,800  U

Indirect labor           $11,000     $9,600      $1,400   F

Utilities                     $7,700      $9,100       $1,400   U

Maintenance            $5,500     $4,800      $700     F

Total Variable cost  $35,300    $38,400    $3,100  U

Fixed expenses

Supervisory Salary    $36,700   $36,700     0

Depreciation              $6,100       $6,100      0

Property, taxes          $7,400       $8,500    $1,100    U

Maintenance              $4,900      $4,900     0            U

Total fixed expense  $55,100     $56,200  $1,100    U

Total controllable

cost                             $90,400    $94,600   $4,200 U

b.          Manufacturing overhead Responsibility report

Controllable cost     Budget      Actual      Favorable (Unfavorable)

Indirect material      $11,100      $14,900     $3,800  U

Indirect labor           $11,000     $9,600      $1,400   F

Utilities                     $7,700      $9,100       $1,400   U

Maintenance            $10,400    $9,700      $700      F

Supervisory salaries$36,700   $36,700     0

Total                          $76,900   $80,000    $3,100  U

8 0
3 years ago
A U.S.-owned car factory in Mexico produces $5 million of cars. $2.5 million of these cars are sold in Mexico and the other $2.5
Dahasolnce [82]

Answer:

The amounted contributed to U.S.GDP is $2 million

Explanation:

First and foremost, the question reiterated that $1 m is due to U.S-owned equipment company and U.S.managers working in Mexico,this is where the key to unlocking the question lies.

On the basis that the money is shared equally between the equipment company and the U.S managers working in Mexico,each group gets $500,000 which is an input for the car manufacturer. However, $2.5m worth of cars are sold to U.S-an output ,deducting the $500000 due to the managers from the output value gives $2m

7 0
3 years ago
A company purchased equipment and signed a 7-year installment loan at 9% annual interest. The annual payments equal $9,000. The
konstantin123 [22]

Answer:

<u>The present value of the loan is $45,297</u>

Explanation:

Instalment (A)= $9,000.00

PV factor (B)= 5.033

Present value of loan (A x B)

=$ 45,297

5 0
3 years ago
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