Keeping the appropriate cash flow in the cash flow register, using a financial calculator, NPV should be calculated for taking the decision.
Answer: According to the NPV calculated, Chen should buy a new machine.
<u>Explanation:</u>
Cash outflow = $40000
Increase in annual after-tax cash flows : CF = $9000
Place the cash flow on a time line:
0 1 2 10
I 10 I I . . . I
-110000 19000 19000 19000
With a financial calculator, input the appropriate cash flow into the cash flow register, input I/YR = 10, and then solve for NPV. The answer for NPV is $6746.78.
Thus, Chen should buy a new machine.
What is the average inventory of a business that turns over inventory 10.0 times a year and has a cost of goods sold of $300,000?
a. $30,000
b. $ 3,000
c. $ 3,000,000
d. $300,010
Inventory is a collection of finished goods or items for manufacture held by a company for business purposes. The company could sell the inventory for profit. That means the products are finished and ready for selling as they are. Alternatively, the company could supply the goods to partner companies for further manufacturing. The products are then transformed or combined to become a different product. It depends on where the company is in the supply chain. Inventory is classed as a company asset. You note it as such on your balance sheet. The costs associated with buying, storing and selling inventory are tax-deductible expenses. The gross profit from the sale of inventory must be declared on your tax return as income. Making note of the expenses you incur from the inventory can lower your income tax amount.
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Based on the information given the amount of quick assets is $128,694.
Using this formula
Quick assets = Cash + Marketable securities + Accounts receivable
Where:
Cash=$16,106
Marketable securities=$37,992
Accounts receivable=$74,596
Let plug in the formula
Quick assets =$16,106 + $37,992+ $74,596
Quick assets = $128,694
Inconclusion the amount of quick assets is $128,694.
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Answer:
Market Price $985.01
Explanation:
We have to convert the US semiannually rate to annually.
Now this is the annual rate spected for a similar US Bonds
So we are going to calculate the present value using this rate.
Present value of an annuity of 78 for 20 years at 7.9521%
PV = 768.55
And we need to add the present value ofthe 1,000 euros at this rate
Present Value = 216.4602211
Adding those two values together
$985.01
The reasoning behind this is that an american investor will prefer at equal price an US bonds because it compounds interest twice a year over the German Bonds.
Answer:
The optimal hedge is 0.642 and it means that the size of the future positions should be 64.2% of the exposure of the company in a 3 month-hedge.
Explanation:
optimal hedge ratio
= coefficient of correlation*(standard deviation of quarterly changes in the prices of a commodity/standard deviation of quarterly changes in a futures price on the commodity)
= 0..8*(0.65/0.81)
= 0.642
Therefore, The optimal hedge is 0.642 and it means that the size of the future positions should be 64.2% of the exposure of the company in a 3 month-hedge.
