d. tyler says his profit is $34,100, and greg says he lost $6,500.
Accounting profit is simply revenues minus explicit (direct) costs whereas economic profit factors in opportunity costs and explicit costs.
Answer:
Yes they should buy the new machine.
Explanation:
since the new mill produces after tax cash savings of $8,200 per year, we should calculate the net present value of the 10 cash flows in order to determine if the project is profitable or not.
using a present value annuity factor for 10 years and 12% discount rate = 5.6502
the project's NPV = ($8,200 x 5.6502) - $38,000 = $46,331.64 - $38,000 = $8,331.64
since the NPV is positive, the project is profitable.
Answer:
Invest $990,099 U.S
Explanation:
The interest rate is 2% for US dollars and 1% for euro
The exchange rate is 1.25 dollars to a euro.
To calculate future exchange rate:
1.25dollars (1+exchange rate of us/1+ exchange rate of euro)
= 1.25(1.02/1.01)
= 1.2625
Approximately 1.26
After a year they will be getting .26 million dollars.
They need to invest something close to this amount 1.2/1.02
Therefore option b is the best answer
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