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9966 [12]
3 years ago
12

Suppose an initial investment of $100 will return $50/year for three years (assume the $50 is received each year at the end of t

he year). Is this a profitable investment if the discount rate is 20%
Business
1 answer:
sukhopar [10]3 years ago
6 0

Answer:

Since the NPV is positive, it is a profitable investment.

Explanation:

Solution

Given that:

The initial investment of $100 would be considered as an outflow.

The inflow for the next three years will be =$50

The discount rate r = 0.2

To find or determine the probability of the investment, discount the future of outflows and inflows. the following formula is applied or used  to find the present value of inflows

PV = FV/(1 + r )^k

Where

PV = present value

FV =future value

r = discount rate

k = time period

Now,

For k =1

PV = 50/(1 + 0.2)

=$41.67

So,

PV  for k = 2 is $34.72 and for k =3 is $28.94

Thus,

The net present value can be calculated by the difference between the outflows and total inflows

NPV =$100- ($41.67 + $34.72 + $28.94)

=$5.33

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Alton ordered an official NFL jersey for his son's birthday and is hoping it will arrive on time. Luckily, the company sent him
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2 years ago
Which of the following is a characteristic of a monopoly market?
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3 years ago
Following is partial information for Delamunte Industries for the month of August: Work In Process Balance, August 1 $ 41,000 Di
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2. The balance in the Work in Process account at the end of August is $61,000.

3. The amounts of direct material cost and applied overhead recorded for Job 248 as of August 31 are $19,000 and $18,000, respectively.

<h3>Data and Calculations:</h3>

Work In Process Balance, August 1 $ 41,000

Direct materials used       75,000

Direct labor 120,000

Manufacturing overhead applied (based on direct labor cost) 90,000

Total costs incurred = $326,000

<h3>Finished Jobs during August: </h3>

Job #    Cost of Jobs Completed

234               $ 58,000

237                  65,000

231                   74,500

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Thus, the work-in-process balance represents Job 248 (Direct labor $24,000, Direct materials $19,000, and Applied Overhead $18,000).

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7 0
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Arnold is the director of an advertising firm. Being the MD, he has the potential or capacity to affect the behavior of his subo
Vsevolod [243]

Answer:

The correct option is A

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