1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
castortr0y [4]
3 years ago
5

Can you think of some other capital budgeting situations in which negative cash flows during or at the end of the project's life

might lead to multiple IRRs? The input in the box below will not be graded, but may be reviewed and considered by your instructor. What is the project's MIRR at r = 10%? Round your answer to two decimal places
Business
1 answer:
guapka [62]3 years ago
5 0

Answer:

Multiple IRRs:

Said another way, Multiple IRRs occur when a project has more than one <em>internal rate of return.</em> The problem arises where a project has non-normal cash flow (non-conventional cash flow pattern).

Internal rate of return (IRR) is one of the most commonly used capital budgeting tools. Investors make decisions by comparing the IRR of the project under consideration with the <em>hurdle rate</em>. If the IRR is greater than the hurdle rate, the project is accepted, otherwise it is rejected. When there are more than two IRRs, it is not exactly clear which IRR to compare with the hurdle rate.

Hurdle rate is the minimum required rate of return which businesses use as a benchmark to decide whether to invest in a project or not.

<em>So a typical situation which can generate negative cashflows which can in turn lead to multiple IRRs towards the end of the project is where the conditions of investment become adverse towards the end of the project.</em>

Imagine that toward the end of the lifecycle of a project, a forecasted increase external costs such as Interest Rate, influenced by government policies translates to an erosion of the bottom line generated by the business in that year.

Period                                             0          1       3  3 4 5

Unconventional cash flows ($)-19,000 16,000 16,000 6,000 6,000 -52,000

The series is non-conventional cash-flow pattern, which has two sign changes. This is the range in which the net present value of the non-conventional cash flow series is positive. The multiple IRR problem poses a series problem to analysts because the decision is not obvious.  

Cheers!

You might be interested in
Sheridan Company manufactures one product. On December 31, 2019, Sheridan adopted the dollar-value LIFO inventory method. The in
disa [49]

Answer:

See attached file

Explanation:

8 0
3 years ago
What do stocks and bonds do?
denpristay [2]

Answer:

stock our for day trading bonds and trading ways thier divided stacks for long term passive income bonds are more safer investment though will be accped by any bank without qeoutions

8 0
3 years ago
______ refers to a set of unspoken guidelines that employees share in various work situations. Organizational theory Organizatio
mr_godi [17]

Organizational culture refers to a set of unspoken guidelines that employees share in various work situations.

<h3><u>Explanation:</u></h3>

The set of expectations that an organisation has towards its employees, the experiences, values to act as a guide to the behaviour of the employees and the experience are encapsulated in the organisation culture. It is the set of guidelines that helps the employees to conduct themselves within and outside the organisation.  

It can be considered as a set of values, beliefs and assumptions that shapes the behaviour of the employees of an organisation. It is the one through which the image of an organisation is projected. It helps the employees to work the way the organisation expects from them.  

3 0
3 years ago
Transactions Concrete Consulting Co. has the following accounts in its ledger: Cash; Accounts Receivable; Supplies; Office Equip
Ann [662]

Answer:

Oct. 1 2019

Rent Expense$4,200 (debit)

Cash $4,200 (credit)

Oct. 3 2019

Advertising Expense $2,670 (debit)

Cash $2,670 (credit)

Oct. 5 2019

Supplies $1,150 (debit)

Cash $1,150 (credit)

Oct. 6 2019

Office Equipment $17,600 (debit)

Accounts Payable $17,600 (credit)

Oct. 10 2019

Cash $5,730 (debit)

Accounts Receivable $5,730 (credit)

Oct. 15 2019

Accounts Payable $1,680 (debit)

Cash $1,680 (credit)

Oct. 27 2019

Miscellaneous Expense $730 (debit)

Cash $730 (credit)

Oct. 30

Utilities Expense $270 (debit)

Cash $270 (debit)

Oct. 31: Fees earned

Trade Receivable $38,200 (debit)

Fees Earned $38,200 (credit)

Oct. 31: Paid bill

Utilities Expense $460 (debit)

Cash $460 (debit)

Oct. 31: Withdrawal

Jason Payne, Capital $2,900 (debit)

Cash $2,900 (credit)

Explanation:

Note

Cash Drawings reduce the owners interest in their capital accounts and at the same time they reduce the assets of cash.

5 0
3 years ago
With a deadline approaching, all seven members of Sharon's product development team were working round-the-clock and still the w
Dvinal [7]

Answer:

Dissimilar mental model

Explanation:

Communication is simply the interaction with two or more people. It is the passing of information. It involves the transfer and understanding of meaning. In communication, members of the organization shows their satisfaction and frustrations.

mental models simply represent a described or support comprehension as it keep info about the current situation available in memory. It guide behavior and allow prediction.

7 0
3 years ago
Other questions:
  • You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 78 - 15Q, where Q =
    13·1 answer
  • A speaker seeking to express the events leading to higher interest rates should choose which pattern of organization?
    11·1 answer
  • Basic FLows, Equivalent Units
    11·1 answer
  • A difference between Maslow's need hierarchy and Alderfer's ERG theory is that
    12·1 answer
  • Clear Calls Inc., a telephone service provider, has a large user base mainly because phone calls and messages between all Clear
    8·1 answer
  • Interwest receives government funding and that funding is tied to the accuracy of the reports put out by its information system.
    13·1 answer
  • A shirt manufacturer buys cloth by the 100 yard roll from a supplier. For setting up a control chart to manage the irregularitie
    11·1 answer
  • O False
    15·1 answer
  • Fixed expenses are $531,000 per month. The company is currently selling 4,000 units per month. The marketing manager would like
    15·1 answer
  • A report by Bedell, Cohen, and Sullivan promotes the use of full-service case management as practice based on an analysis of a p
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!