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sweet-ann [11.9K]
3 years ago
15

Projects S and L both have normal cash flows, and the projects have the same risk, hence both are evaluated with the same WACC,

10%. However, S has a higher IRR than L. Which of the following statements is CORRECT?
A. Project S must have a higher NPV than Project L.
B. If Project S has a positive NPV, Project L must also have a positive NPV.
C. If the WACC falls, each project's IRR will increase.
D. If the WACC increases, each project's IRR will decrease.
E. If Projects S and L have the same NPV at the current WACC, 10%, then Project L, the one with the lower IRR, would have a higher NPV if the WACC used to evaluate the projects declined.
Business
1 answer:
kirill115 [55]3 years ago
6 0

Answer:

E. If Projects S and L have the same NPV at the current WACC, 10%, then Project L, the one with the lower IRR, would have a higher NPV if the WACC used to evaluate the projects declined.

Explanation:

Net present value is the present value of after tax cash flows from an investment less the amount invested.

Internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested

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If a single company cheats on the cartel agreement then the unmarried company can grow its profit.

A cartel agreement is a settlement between competitions with the aim of hindering or proscribing competition or creating fake competition. Cartel agreements also can exist between providers and consumers, such as an instance retail fees.

A few examples of a cartel encompass The enterprise of the Petroleum Exporting Countries (OPEC), an oil cartel whose members manage forty four% of worldwide oil production and 81.5% of the world's oil reserves.

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2 years ago
A central bank buys treasury securities at market rates in order to:
Ber [7]

Answer:

C increase the money supply in the economy

Explanation:

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3 years ago
You are considering adding a new food product to your store for resale. You are certain that, in a month, minimum demand for the
Alenkasestr [34]

Answer:

Using EMV analysis, the number of units of the new product should be purchased for resale = Purchase 7.

The maximum EMV of profit you can make is 270.

Explanation:

We can use the following method to solve the given problem

Solution:

Using EMV analysis,

EMV (Purchase 6 for resale)= 6(40)(0.1) + 6(40)(0.4) + 6(40)(0.5)=240

EMV (Purchase 7 for resale) = [6(40)-60](0.1) +7(40)(0.4) + 7 (40)(0.5) = 270

EMV (Purchase 8 for resale) = [6(40)-2(60)] (0.1) + [7 (40) - 60] (0.4) + 8(40)(0.5)= 260

Largest EMV= 270; Choose to purchase 7 units for resale.

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Read 2 more answers
Gundy Company expects to produce 1,243,200 units of Product XX in 2020. Monthly production is expected to range from 79,000 to 1
a_sh-v [17]

Answer:

Gundy Company

Flexible Budget Report for the month of March, 2020:

                          Flexible Budget     Actual Budget     Variance

Direct materials    $400,000              $425,000       $25,000 U

Direct labor           $700,000              $695,000         $5,000 F

Overhead           $1,000,000            $1,005,000         $5,000 U

Fixed Cost            $632,000              $632,000          $0        None

Explanation:

a) Data and Calculations:

Expected production units for 2020 = 1,243,200

Monthly production range = 79,000 to 121,000

Budgeted variable manufacturing costs per unit are:

Direct materials $4

Direct labor        $7

Overhead        $10

Total variable cost   $21

Budgeted fixed manufacturing costs per unit:

Depreciation   $5

Supervision     $3     $8

Total costs    $29

Total fixed cost = 79,000 * $8 = $632,000

Actual costs incurred in March 2020:

Production units = 100,000

Direct materials = $425,000 ($4.25 per unit)

Direct labor = $695,000 ($6.95 per unit)

Variable overhead = $1,005,000 ($10.05 per unit)

Actual fixed costs = $632,000

Flexible Budget:

Direct materials $400,000 ($4 * 100,000)

Direct labor        $700,000 ($7 * 100,000)

Overhead        $1,000,000 ($10 * 100,000)

Fixed Cost         $632,000

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3 years ago
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