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Nikolay [14]
3 years ago
11

Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all invest

ments. The company is considering two different investments. Each require an initial investment of $15,000 and will produce cash flows as follows: End of Year Investment A B 1 $ 8,000 $ 0 2 8,000 0 3 8,000 24,000 The present value factors of $1 each year at 15% are: 1 0.8696 2 0.7561 3 0.6575 The present value of an annuity of $1 for 3 years at 15% is 2.2832 Which investment should Alfarsi choose?
Business
1 answer:
ohaa [14]3 years ago
6 0

Answer:

PV = $18,265.6

Explanation:

We will calculate the present value of the first investment ussing the annuity factor

annuity per year x factor = PV

8,000 x 2.2832 =  18,265.6

Then we calculate the PV of the second investment by multiplying the third year cash flow by the present value of $1 in 3 years

nominal x factor = PV

24,000 x 0.6575 = 15,780

the first alternative PV is higher than the second, so it is a better option

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Sam's business will cost $49,500 to set up and run for the first year. Sam then expects an annual operational expense total of $
BabaBlast [244]

Answer:

Within 2 years

Explanation:

1st year of Sam's business:

Operational expense = $30,500

Profit = $45,000

Business set up costs = $49,500

Overall business profit (Loss) = $(4,500)

2nd Year of Sam's business:

Since the profit will be increased by 5.5%, the new profit after operational expenses will be $45,000 + $(45,000 x 5.5%) = $47,475

Therefore, the overall profit = Last year's loss + This year's profit = $(-4,500+47,475) = $42,975

Therefore, he can achieve the overall profit within 2 years' of operation.

4 0
2 years ago
Johnston Chemicals' president is very excited about the possibility of the firm's British subsidiary having access to customers
iVinArrow [24]

Answer: Cultural factors

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6 0
3 years ago
Melissa is an early-maturing girl. compared to her late-maturing friends, we can expect melissa: to have a higher self-esteem. t
padilas [110]
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5 0
3 years ago
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zubka84 [21]

Answer:

The correct answer is ENRON.

Explanation:

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Jeffrey Skilling, the mind behind accounting, did his last master move badly. Before the bankruptcy they were seen coming, he resigned his position alleging family reasons and sold the shares he had in the company. Four months later came bankruptcy. Supposedly, he didn't know anything about the critical situation of the company. He did not strain.

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7 0
3 years ago
The purpose of a PERT network is: to monitor the quality of a product for compliance with ISO 9000 standards. to monitor the pro
aliina [53]

Answer:

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Explanation:

To begin with, a <em>"Program Evaluation and Reviews Techniques"</em> or PERT as it name indicates it refers to an stadistic technique by which the companies can follow the process of certain projects that they are having currently. Moreover, its main purpose is to manage and analyze the steps that a project has in order to make them less susceptible to errors. In addition to that, its main factor to observe is the time during the steps of the project. Nowadays is very common to use a tool like this in major companies.

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