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
LenKa [72]
4 years ago
14

Your buddy in mechanical engineering has invented a money machine. The main drawback of the machine is that it is slow. It takes

one year to manufacture $100. ​However, once​ built, the machine will last forever and will require no maintenance. The machine can be built​ immediately, but it will cost $1,000 to build. Your buddy wants to know if he should invest the money to construct it. If the interest rate is 9.5% per​ year. a. What should your buddy​ do? b. What is your advice if the machine takes one year to​ build?
Business
1 answer:
m_a_m_a [10]4 years ago
5 0

Answer:

 

Explanation:

a ) We shall calculate the NPV of the project . If it is positive , then money can be invested

Cash outflow in the beginning =1000

Present value of perpetual annuity of 100 at 9.5 %

100 / .095

= 1052.63

which is more than initial cash outflow

So NPV is positive

Hence money can be invested.

b )

If machine takes one year to build , first year cash outflow of 100 will be absent

Present value of 100 after 1 year

= 100 / 1.095

= 91.32

So present value of annuity

= 1052.63 - 91.32

= 961.31

This is less than 1000 so

NPV is negative.

Hence money can not be invested.

You might be interested in
Mountain Springs Water Company has two departments, Purifying and Bottling. The Bottling Department had 2,900 liters in beginnin
zimovet [89]

Answer: 61,390 liters

Explanation:

If materials were added at the beginning, they will be 100% accounted for at the end of the process.

Equivalent Units = Units started and completed + Ending inventory

= Units completed - Beginning WIP + Ending inventory

= 59,110 - 2,900 + 5,180

= 61,390 liters

6 0
3 years ago
Describe an example of a problem that could be solved using the Coase theorem. Do this by defining a hypothetical situation wher
wariber [46]

Answer:

Explanation:

Theorem Utilization: Coase Theorem has been created to take care of the issue of market disappointment. Market disappointment exists where value component doesn't convey productive outcome.  

Example : For instance, dairy cattle of Rancher wandered into close to field. this is a sort of negative externalities. On the off chance that property right is given to rancher, at that point he can sue Rancher for making harm crop. Yet, there is no privilege to rancher, it suggests that privilege has been given to farmer. Presently here rancher will attempt to repay Rancher to lessen the size of his cows group.  

Three necessary conditions:

  1. The rights of property should be well defined.
  2. The rights of property should be transferable.
  3. The cost of transaction must be sufficiently small.

It doesn't make a difference whom property right is given, there will be effective results. Coase hypothesis bombs where haggling cost rises or free rider issues are seen.

3 0
3 years ago
"if our company achieves a high level of relational coordination, what can we expect in terms of employee behavior?" check all t
scoray [572]

If a company has a high level of relation coordination then the expected employee behavior is good as well. The employees respond to the company is highly satisfactory

6 0
3 years ago
If Randy invests $15,000 at a 9% interest
WITCHER [35]

It will take 8.04 years for the initial investment of $15000 to become $30,000

What is the future value of an investment?

The future value of $15,000 invested now earning a rate of return of 9% per year is $30,000, it the future equivalent of an amount invested now when the invested amount has earned interest over a specific period of time.

The below future value formula of single cash flow can be used to determine the number of years it takes for the initial investment to double.

FV=PV*(1+r)^N

FV=future value=$30,000

PV=initial investment=$15,000

r=rate of return=9%

N=number of years it takes for the initial investment to double=unknown(assume it is X)

$30,000=$15000*(1+9%)^N

$30000/$15000=(1+9%)^N

2=1.09^N

take log  of both sides

ln(2)=N*ln(1.09)

N=ln(2)/ln(1.09)

N=8.04 years

Find out more about future value on:brainly.com/question/24703884

#SPJ1

8 0
2 years ago
1. A parent sells merchandise to its subsidiary at a markup of 20% on cost. In the current year, the subsidiary had $120,000 in
NARA [144]

Answer:

The subsidiary reports cost of goods sold at A. $660,000.

Explanation:

Cost of goods sold is the direct cost of producing or purchasing the goods sold by a business. The formula for cost of goods sold is as follows:

Cost of goods sold = Opening inventory + Purchases - Closing inventory

The subsidiary calculates its cost of goods sold as follows.

Opening inventory           $120,000

Add: Purchases                $720,000

Less: Closing inventory    ($180,000)

Cost of goods sold           $660,000

Therefore, the correct option is A. $660,000.

6 0
3 years ago
Other questions:
  • According to an article in marketing news, fewer checks are being written at grocery store checkout stands than in the past. to
    8·1 answer
  • Rodriguez Corporation issues 13,000 shares of its common stock for $130,900 cash on February 20.Prepare journal entries to recor
    10·1 answer
  • Suppose that SoS sells both versions and wants to charge different prices for different versions. What is the highest price of t
    15·1 answer
  • The adjusting entry for accrued wages was omitted at July 31, the end of the current year. Indicate which items will be in error
    15·1 answer
  • Compared to World War II, World War I was (more/less/equally) devastating to the agriculture community. Choose the correct answe
    13·2 answers
  • a black female employee is told that she cannot come to work with her hair in a decorative braids traditionally worn in Africa,
    15·1 answer
  • A negotiable instrument can function as a substitute for cash.
    11·1 answer
  • The Capitalpoor Company is considering purchasing business machine for $100,000. An alternative is to rent it for $35,000 at the
    8·1 answer
  • Determine income tax expense under the current situation:Taxable income during the year: $220 millionChange in future taxable am
    11·1 answer
  • Which of these is an example of a shortage?
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!