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4 years ago

Net Present Value Method

Business

1 answer:

arsen [322]4 years ago

4 0

Answer:

year net cash flow

0 -$150,000

1 $80,000

2 $65,000

3 $50,000

4 $40,000

A) NPV = -$150,000 + ($80,000 x .87) + ($65,000 x .756) + ($50,000 x .658) + ($40,000 x .572) = -$150,000 + $69,600 + $49,140 + $32,900 + $22,880 = -$150,000 + $174,520 = $24,520

B) Yes , because the net present value indicates that the return on the proposal is greater than the minimum desired rate of return of 15%. Since the NPV is positive ($24,520), it means that the cash inflows are higher than the cash outflows when we use a 15% discount rate.

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zzz [600]

Answer:

$35.085

Not in options.

Explanation:

As for the provided information,

Details of Production are:

Toasters = 2,200 units

Blenders = 1,500 units

Hours required for each unit are:

Toasters = 1.25

Blenders = 1

Now, therefore, total hours of direct labor

Toasters = 2,200 $\times$ 1.25 = 2,750

Blenders = 1,500 $\times$ 1 = 1,500

Total hours = 4,250

Thus, total overheads = $149,115

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Based on the information given the answer is $35.085, although this is not in the option.

Therefore, options provided are incorrect.

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Answer:

$21,435.74

Explanation:

Marko will pay as much as the discounted present value of the cash flow:

$\frac{Maturity}{(1 + rate)^{time} } = PV$

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time 1.00

rate 0.14000

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PV 4,385.9649

$\frac{Maturity}{(1 + rate)^{time} } = PV$

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time 2.00

rate 0.14000

$\frac{9000}{(1 + 0.14)^{2} } = PV$

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$\frac{Maturity}{(1 + rate)^{time} } = PV$

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time 3.00

rate 0.14000

$\frac{15000}{(1 + 0.14)^{3} } = PV$

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We add them together and get the total price for ABC Co

$\left[\begin{array}{ccc}#&Cashflow&Discounted\\&&\\1&5000&4385.96\\2&9000&6925.21\\3&15000&10124.57\\&total&21435.74\\\end{array}\right]$

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4 years ago

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Answer:

conceptual skills

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Answer:

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Answer:

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