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Alja [10]
3 years ago
14

Haroldsen Corporation is considering a capital budgeting project that would require an initial investment of $350,000. The inves

tment would generate annual cash inflows of $133,000 for the life of the project, which is 4 years. At the end of the project, equipment that had been used in the project could be sold for $32,000. The company’s discount rate is 14%. The net present value of the project is closest to: Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided. Multiple Choice $214,000 $37,429 $56,373 $406,373
Business
2 answers:
meriva3 years ago
7 0

Answer:

The answer is: $56,373.

Explanation:

The project net present value is equals to the sum of:

+ Initial cash outflow: $(350,000);

+ Present value of the annuity lasting for 4 years, with annual cash inflow of 133,000, discounted at required return rate of 14%; calculated as: 133,000/14% * [ 1 - 1.14^(-4) ] = $387,524;

+ Present value of equipment recovery at the end of year 4: 32,000/1.14^4 = $18,946.

=> Project net present value = -350,000 + 387,524 + 18,946 = $56,470.

So, its net present value is closest to $56,373.

rjkz [21]3 years ago
3 0

Answer:

The correct answer is option C.

Explanation:

Giving the following information:

The initial investment of $350,000. The investment would generate annual cash inflows of $133,000 for the life of the project, which is 4 years. At the end of the project, equipment that had been used in the project could be sold for $32,000. The company’s discount rate is 14%.

We need to use the following formula:

NPV= -Io + [Cf/(1+i)^n]

Io= 350,000

1= 133,000/1.14

2= 133,000/1.14^2

3= 133,000/1.14^3

4= 165,000/1.14^4

NPV= $56,470.31

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Six months​ ago, the price of gasoline was​ $2.20 per gallon.​ Now, the price is​ $2.40 per gallon. In response to this price​ i
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Answer:

4.545

Explanation:

Given:

Six months​ ago, the price of gasoline was​ $2.20 per gallon.

Now, the price is​ $2.40 per gallon.

In response to this price​ increase, the number of gallons of gasoline purchased has declined by 2 percent.

Question asked:

Based on this​ information, what is the absolute price elasticity of demand for​ gasoline?

<u>Solution:</u>

As we know:

Price elasticity of demand = \frac{\% change\ in\ quantity\ demanded}{\% change\ in\ price}

\% change\ in\ quantity\ demanded = \frac{new\ value-old \ value}{old\ value} \times100\\

                                                  =\frac{2.40-2.20}{2.20} \times100\\\\ =\frac{0.2}{2.20} \times100\\ \\ =\frac{20}{2.20} \\ \\ =9.09

\% change\ in\ price=2  ( given)

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4 0
3 years ago
The cost of preferred stock
Ghella [55]

Answer:

Dividends are fixed ⇒ Debt

Preferred dividends are fixed much like the interest payments made on debt which makes this a characteristic of debt.

Usually have no specified maturity date ⇒ Equity

Equity does not have an expiration or maturity date and preferred shares share this same characteristic.

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The value of a Preferred stock is calculated by the formula:

Price = Dividend / Cost of preferred stock

97.95 = 11 / Cp

97.95 * Cp = 11

Cp = 11/ 97.95

= 11.23%

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Answer:

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$50 represents the highest amount the student is willing to buy the textbook. She would be willing to buy the textbook at any price equal or below $50.

$30 represents the lowest amount the publisher is willing to sell his textbook. He would accept any price equal or greater than $30.

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I hope my answer helps you

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