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blsea [12.9K]
3 years ago
9

ABC Corp. is considering an investment project that costs $500 today. It expects the project will yield income of $200 at the en

d of years 1, 2, and 3. The interest rate must be ________ for the firm to undertake the project.
Business
1 answer:
lilavasa [31]3 years ago
8 0

Answer:

B) no more than 9%

Explanation:

The computation of the rate of interest is given below:

Given that

Initial Cost = $500

Yearly Yield = $200

Based on the above information  

Let us assume the rate of interest be 10%

So,

PV at 10% is

= - $500 + $200 ( P/A , 10% , 3 )

= -$500 + $200 ( 2.487 )

= - 500 + 497.4

= -2.6

As we can see that the at 10% there is a negative value and if we take more than 10% so again it would be the negative value

Now

Let us assume the rate of interest be 10%

So,

PV at 8% is

= - $500 + $200 ( P/A , 8% , 3 )

= -$500 + $200 ( 2.577 )

= -$500 + $515.4

= $15.4

So the rate of interest would not be more than 9%

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What is the name of a person or business that is a parial owner of a company.?
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Answer:

Shareholder

Explanation:

A person or business that’s is a partial owner of a company

8 0
3 years ago
Sidewinder, Inc., has sales of $634,000, costs of $328,000, depreciation expense of $73,000, interest expense of $38,000, and a
OlgaM077 [116]

Answer:

$86,050

Explanation:

Data provided in the question:

Sales = $634,000

Costs = $328,000

Depreciation expense = $73,000

Interest expense = $38,000

Tax rate = 21 percent

Dividends paid = $68,000

Now,

EBIT = Sales - Cost - Depreciation

= $634,000 - $328,000 - $73,000

= $233,000

EBT = EBIT - Interest

= $233,000 -  $38,000

= $195,000

Net income = EBT - Tax

= $195,000 - (0.21 × $195,000)

= $195,000 - $40,950

= $154,050

Addition to retained earnings = Net income - Dividends

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= $86,050

7 0
3 years ago
A stock has a correlation with the market of 0.49. The standard deviation of the market is 25%, and the standard deviation of th
olasank [31]

Answer:

Stock's beta  = 0.65 (Approx)

Explanation:

Given:

Correlation = 0.49

Standard deviation of stock (SDs) = 33% = 0.33

Standard deviation of market  (SDm) = 25% = 0.25

Find:

Stock's beta

Computation:

Stock's beta = Correlation(SDs) / SDm

Stock's beta = 0.49 (0.33) / 0.25

Stock's beta  = 0.65 (Approx)

4 0
3 years ago
Which of the following would probably be a variable cost in a soda bottling plant? a. Direct labor b. Bottles c. Carbonated wate
cestrela7 [59]

Answer:

Option E

 

Explanation:

A variable cost refers to the business expense that varies in relation to revenue from manufacturing. Based on the volume of output of a business, variable expenses gets significantly impact; these increase as productivity increases, and decline as production declines. Sources regarding variable costs typically involve raw material and storage costs.

Thus, from the above we can conclude that all of the mentioned costs are variable costs as direct labor , bottles and water will all increase as the level of production will increase.

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3 years ago
How many McDonalds are in America
Anastaziya [24]
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4 0
3 years ago
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