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tensa zangetsu [6.8K]
3 years ago
14

A project has been assigned a discount rate of 12 percent. If the project starts immediately, it will have an initial cost of $4

80 and cash inflows of $350 a year for three years. If the start is delayed one year, the initial cost will rise to $520 and the cash flows will increase to $385 a year for three years. What is the value of the option to wait?a. $.70b. $1.08c. $1.67d. $2.20e. $.20
Business
1 answer:
victus00 [196]3 years ago
7 0

Answer:

The value of the option to wait is $0.70,option A.

Explanation:

In calculating the value of the option to wait,I discounted all cash flows under both alternatives, using the discount rate of 12% as given in the question.

Option to start now gives net present value(positive return ) of $360.64 while the other one gives $361.34,invariably option to wait one year gives $0.70($361.34-$360.64) more than the option to start now.

The formula used in the calculating present value is PV=FV(1+r)^n

Where PV=present value

FV=future value

r=rate of interest

n=number of year

Find attached spreadsheet for detailed calculations.

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Pedee Company's inventory turnover in days is 80 days. Which of the following actions could help to improve that ratio? a.Increa
snow_lady [41]

Answer:

d. Reduce average Inventory

Explanation:

Inventory turnover ratio represents how quickly an entity's inventory is converted into sales and cash is generated.

Inventory turnover in days is computed as;

= \frac{365\ days}{Inventory\ Turnover\ ratio}

Inventory turnover ratio can be computed as:

= \frac{Cost\ of\ goods\ sold}{Average\ Stock}

Average stock = \frac{Op\ stock\ +\ Closing\ Stock}{2}

wherein,  Op stock = Opening stock

Cost of Goods Sold = Sales - Gross Profit

A reduction in the average inventory level would increase the inventory turnover ratio, and thus reduce the inventory conversion period from 80 days to a lower level.

7 0
3 years ago
Lin corporation has a single product whose selling price is $134 and whose variable expense is $67 per unit. the company's month
Rashid [163]

Answer:

600 units

Explanation:

The equation to calculate target profit is:  

S × Q = (V × Q) + F + T

  • S = sales price  
  • Q = Quantity of units
  • V = Variable expenses
  • F = Fixed expenses
  • T = Target profit

$134Q = $67Q + $32,300 + $7,900

$134Q - $67Q = $40,200

$67Q = $40,200

Q = $40,200 / $67 = 600

7 0
3 years ago
Cash $38,600 Short-term investments 9,000 Accounts receivable 40,000 Inventory 240,000 Prepaid expenses 17,400 Accounts payable
ZanzabumX [31]

Answer:

Current ratio and Acid-test ratio (3.15 and 0.80)

Explanation:

Note: The missing part of the question is <em>"Using the following year-end information for Bauman, LLC, calculate the current ratio and acid-test ratio:</em>"

i. Current ratio = Current assets/Current liabilities

Current assets = 38,600 + 9,000 + 40,000 + 240,000 + 17,400

Current assets = $345,000

Current liabilities= 87,200 + 22,300

Current liabilities = $109,500

Current ratio = $345,000 / $109,500

Current ratio = 3.15

ii. Acid-test ratio = {Current assets - (Inventory + Prepaid expenses)}/Current liabilities

Acid-test ratio = 345,000- (240,000  + 17,400 ) / 109,500

Acid-test ratio = 87,600 / 109,500

Acid-test ratio = 0.80

5 0
3 years ago
You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products
ZanzabumX [31]

Answer:

See explanation below

Explanation:

Here, when the price of guppy gummies increases by 5%, the quantity of raskels sold decreases by 4% and the quantity of cannes sold increases by 5%.

i.e, % change in price of guppy grummies = 5%

% change in quantity of raskels = -4%

% change in quantity of cannes = 5%

i) Find the Cross price elasticity of demand between guppy grummies and raskels. Use the expression below.

% change in quantity demanded of raskels / % change in price of guppy gummies

= -4% / 5%

= -0.8

Substitute goods have a negative cross price elasticity of demand. Since, the cross price elasticity of demamd here is negative, the goods are substitute.

It is recommended not to advertise raskels with guppy grummies

ii) Find the Cross price elasticity of demand between guppy grummies and cannes. Use the expression below.

% change in quantity demanded of cannes / % change in price of guppy gummies

= 5% / 5%

= 1

Complement goods have a positive cross price elasticity of demand. Since, the cross price elasticity of demamd here is positive, the goods complement each other.

It is recommended to advertise cannes with guppy grummies.

5 0
3 years ago
There are only two consumers in a market, Harry and Hermione. Harry is willing to buy 12 magic wands when the price is $20 per w
Blizzard [7]

Answer:

The answer is 14

Explanation:

8 0
3 years ago
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