Answer:
a. Project A requires an up-front expenditure of $1,000,000 and generates a net present value of $3,200.
Explanation:
a.
The company should accept project A because it provides a positive net present value of $3,200 that is the highest among all the projects.
b.
When the IRR of a project is lower than the required rate of return of the project, it will generate the negative net present value because at IRR the net present value of the project will be zero and at a higher rate than IRR it will be negative.
c.
The project with a profitability index of less than 1 generates a negative NPV because the present value of future cash flows is less than the initial cash outflow.
d.
Project D also generates a positive net present value but it is lower than project A. So, after comparing the results we will choose the project with higher NPV.
Contribution for Standard is $30 per unit and Supreme is $60 per unit, Thus if Fixed expenses are first divided between the two products on the basis of Contribution per unit, It can be calculated as below:
Fixed Expense Bifurcated on basis of Contribution per unit= 30:60
Which Comes to 1:2
Thus it will be bifurcated as $1200000 for Supreme and $600000 for Standard
Thus for Standard to break even it Requires to Sell the below no of units:
Break Even Point in units=
Break Even Point in units=
Break even points in units=20000 units
Gaining a profit from sold goods is helpful because the use of scarce resources is optimized. It also provide jobs. The bad side of being in a profit motive business is that some may be tempted to deal with customers . I think that a profit motive business is a good thing.
Answer:
the expected return on the portfolio is 15.50%
Explanation:
The computation of the expected return on the portfolio is shown below:
Total investment is
= $2,700 + $3,800
= $6,500
Now
Expected return of portfolio is
= ($2,700 ÷ $6,500) × 12 + ($3,800 ÷ $6,500) × 18
= 4.98% + 10.52%
= 15.50%
Hence, the expected return on the portfolio is 15.50%
Answer:
8.89%
Explanation:
The answer is 8.89%
Here is how we arrived at this.
Dividend = 1$ times 4
= $4 annually
Then we calculate for the nominal rate of return.
This is equal to dividend / price.
= $4/ $45
= 0.0889
To convert this to percentage
0.089 x 100
= 8.89% is the nominal annual rate of return.
