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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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Answer:

e. 71 dollars

Explanation:

Peter was willing  to but the wine for $45

In a year, there is an increase of $15 = $45 + $15 = $60

The interest rate of 10% of $60 = $6

Total = $66 ~ $70

Therefore, the amount he is willing to pay for the win if he buys it as investment would be 71 dollars.

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3 years ago
XYZ Corporation, located in the United States, has an accounts payable obligation of ¥750 million payable in one year to a bank
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Answer and Explanation:

The answer is attached below

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3 years ago
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3 years ago
Gena Manufacturing Company has a fixed cost of $225,000 for the production of tubes. Estimated sales are 150,000 units. A before
kykrilka [37]

Answer: $2.33

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The unit contribution margin that is required to attain the profit target will be calculated thus:

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7 0
3 years ago
You have purchased a put option on Pfizer common stock. The option has an exercise price of $53 and Pfizer’s stock currently tra
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Answer:

A. -0.80

B. 2.20

Explanation:

A. Calculation for your net profit on the option if Pfizer’s stock price does not change over the life of the option

Net profit per share=max(53-55,0)-0.80

Net profit per share=0-0.80

Net profit per share=-0.80

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Therefore your net profit on the option if Pfizer’s stock price falls to $50 and you exercise the option is 2.20

3 0
3 years ago
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