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lyudmila [28]
3 years ago
15

Carr Company is considering two capital investment proposals. Estimates regarding each project are provided below:Project Soup P

roject NutsInitial investment $400,000 $600,000 Annual net income 30,000 46,000 Net annual cash inflow 110,000 146,000 Estimated useful life 5 years 6 years Salvage value -0- -0- The company requires a 10% rate of return on all new investments.Present Value of an Annuity of 1Periods 9% 10% 11% 12% 5 3.890 3.791 3.696 3.6056 4.486 4.355 4.231 4.111The annual rate of return for Project Soup is
Business
1 answer:
jeka943 years ago
6 0

Answer:

IRR = 11.65%

Explanation:

Period  Cash Flow

0    -400,000

1     110,000

2     110,000

3     110,000

4     110,000

5     110,000

We could list the annual cash inflow and solve using the excel formula

IRR               0.11649

Or if we aren't allowed to do so, use maths

The way to obtain the present value would be:

Annuity x factor = PV

If we know know the rate we can look into the table doing:

factor = PV/annuity

We know Project Soup is 5 year so we look into this row:

400,000/110,000 = 3.6363

The rate wold be between 11% 3.696 and 12%  3.605

Those rate are close to our goal of 3.6363

We could solve an approximation doing excel or working with math:

\left[\begin{array}{cc}X&Y&\\x_0 = 3.696&y_0 = 0.11&x=3.6363&?&x_1=3.605&y_1 =0.12\end{array}\right]

y = y_0 +\frac{y_1-y_0}{x_1-x_0} (x-x_0)

We got from the table, the 2 rates which are close to our goal, and thetwo factor close to our goal. we post each value into the formula and solve:

y = 0.11 +\frac{.12-.11}{3.696-3.605} (3.6363-3.605)

y = 0.11 +\frac{0.01}{0.091} (0.0313)

y= 0.1165 = 11.65%

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Revocable living trust refers to a form of planning that help you determine the person who would obtain your properties when you die. A revocable living trust would cover three phases of the maker's life:   his lifetime, possible incapacitation, and what happens after his death.

8 0
3 years ago
While stocking the shelves with a new soup, the store manager notes a difference in price between the 16-ounce can and the 32-ou
asambeis [7]

Answer:

The correct answer is: Cost-Plus Pricing Strategy.

Explanation:

To begin with, a ''Cost-Plus'' is the name that a pricing strategy receives in the field of marketing and business that mainly focuses on the pricing of a product by the cost of it plus a certain porcentage of benefit, considering this last one as the benefit margin. Moreover, this type of pricing strategy is one of the most common ones in the field, typically the businesses use this type of pricing strategy due to the fact that it is easy to establish and it does not consider complex terms.

Secondly, in this case where the manager notices such a difference in the prices of the two cans is due to the fact that the manufacturer put less commodities and less effort in the can of 16-ounce rather than in the other can of 32-ounce where there is more soup and therefore there is more cost in that can, establishing that a higher price must put in that one.

5 0
3 years ago
Alonzo, the marketing director for a major retailer, prepared a unified message for the new promotional campaign. after several
Zigmanuir [339]
<span>The goal of the campaign or promotion is to build awareness and inform consumers about a company and its product offerings</span>
In order to see if there is still increase in the sale compared with the money spent of campaign , Alonzo is evaluating the effectiveness of the plan. The evaluation of effectiveness is one of the 6 steps of the promotional campaign.
4 0
3 years ago
Krustyburger just paid a dividend of $2 and has a required return of 15%. Which of the following equations represent's today's v
Neko [114]

Answer:

d. $2(1.10)/[0.15-0.10]

Explanation:

The formula to compute the today value of the stock by using the Gordon model is shown below:

= Next year dividend ÷ (Required rate of return - growth rate)

where,

Next year dividend is

= $2 + $2 × 10%

= $2 + 0.2

= $2.2

And, the required rate of return is 15%

Plus the growth rate of return is 10%

So, the today value of the stock is

= $2.2 ÷ (15% - 10%

= $44

8 0
3 years ago
P13–11 EPS calculations Southland Industries has $60,000 of 6% (annual interest) bonds outstanding, 1,500 shares of preferred st
777dan777 [17]

Answer:

$1.28

Explanation:

The computation of the earning per share is shown below:

As we know that

Earning per share = Net income ÷ Number of shares outstanding

where,

Net income is

Earning before interest and taxes      $24,600

Less: Interest

($60,000 × 6%)                                      - $3,600

Income before tax                                  $21,000

Less: tax for 40%                                    - $8,400

Earning after tax                                     $12,600

Less: Preference dividend

(1,500 shares × $5)                                  -$7,500

Income available                                       $5,100

So the earning per share is

= $5,100 ÷ $4,000

= $1.28

3 0
3 years ago
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