1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Sliva [168]
3 years ago
5

The CFO of the company believes that an appropriate annual interest rate on this investment is 4%. What is the present value of

this uneven cash flow stream, rounded to the nearest whole dollar?
$1, 625,000
$1, 685, 335
$1, 975,000
$600,000
Identify whether the situations described in the following table are examples of uneven cash flows or annuity payments:
Description Uneven Cash Flows Annuity You recently moved to a new apartment and signed a contract to pay monthly rent to your landlord for a year.
SOE Corp. hires an average of 10 people every year and matches the contribution of each employee toward his or her retirement fund.
Franklinia Venture Capital (FVC) invested in a budding entrepreneur's restaurant. The restaurant owner promises to pay FVC 10% of the profit each month for the next 10 years.
You have committed to deposit $600 in a fixed interest-bearing account every quarter for four years.
Business
1 answer:
irinina [24]3 years ago
6 0

Answer:

Present value of the cash flows = $1,625,000 /1.04 + $1,685,335/1.04  + $1,975,000/1.04 + $600,000/1.04 = $5,389,337.27

You recently moved to a new apartment and signed a contract to pay monthly rent to your landlord for a year.  ⇒ ANNUITY

SOE Corp. hires an average of 10 people every year and matches the contribution of each employee toward his or her retirement fund.  ⇒ UNEVEN CASH FLOW (EACH EMPLOYEE'S SALARY VARIES, SO THE TOTAL EXPENSE ALSO VARIES)

Franklinia Venture Capital (FVC) invested in a budding entrepreneur's restaurant. The restaurant owner promises to pay FVC 10% of the profit each month for the next 10 years.  ⇒ UNEVEN CASH FLOW (PROFITS ARE NOT IDENTICAL FORM ONE PERIOD TO ANOTHER)

You have committed to deposit $600 in a fixed interest-bearing account every quarter for four years. ⇒ ANNUITY

You might be interested in
Consider the adjustment process at the end of the accounting period. 1. Record the adjusting entries in the journal. 2. Prepare
dimulka [17.4K]

Answer:

3, 1, 4, 2

Explanation:

The adjustment are required so that any change in any account would be recorded in the books of accounts

The steps to record the adjustments is as follows

3. Determine the accounts requiring adjustment, using the unadjusted trial balance. Like supplies, insurance, rent, etc

1. Record the adjusting entries in the journal.  Like supplies, insurance, rent, etc

For example, the adjusting entry for supplies account is

Supplies expense A/c Dr XXXXX

     To Supplies A/c XXXXX

(Being the supplies expense is recorded)

4. Post the adjusting entries to the general ledger.

2. Prepare an adjusted trial balance to check the equality of the debits and credits. It includes all the adjusting entries that are recorded and the trial is always matched.

6 0
3 years ago
The Net Promoter Score measures:​ Group of answer choices the degree to which a viewer promotes the product.​ ​revisits to the p
marysya [2.9K]

<u>Answer</u>:

The Net Promoter Score measures:​ (A) the degree to which a viewer promotes the product, (C) satisfaction and its (D) ​loyalty.

<u>Explanation</u>:

Net Promoter Score or NPS is a variety of index that is given to the customers of a product or service by the brands to know how they feel about the product and the brand. Primarily, the NPS is concentrated on understanding how much the customer is willing to promote or recommend the company's product or service to others. Additional fields that the NPS targets are customer satisfaction and how much the customers are loyal to the brand.

Hence, alternatives A, C, and D are correct for the Net Promoter Score.

5 0
4 years ago
On November 1, Alan Company signed a 120-day, 10% note payable, with a face value of $57,000. Alan made the appropriate year-end
just olya [345]

Answer:

Amount paid to record is $58,900

Explanation:

In this question, we are asked to state the Journal entry as of March 1.

Please check attachment for tabular explanation

Kindly note that 360 is used as the number of days in a year

4 0
3 years ago
Fijisawa Inc. is considering a major expansion of its product line and has estimated the following free cash flows associated wi
Kipish [7]

Answer:

Explanation:

a.)

Using Financial calculator, enter the following CFs to find NPV;

CF0 = -1,800,000

C01 =600,000

C02 =600,000

C03 =600,000

C04= 600,000

C05 = 600,000

Interest rate ( I ) = 8%

CPT NPV = $595,626.02

b.)

Profitability Index (PI)

<em>PI= NPV of cash inflows / Initial outlay</em>

Using Financial calculator, enter the following CFs;

Find the NPV of the expected future cash inflows;

CF0 = 0

C01 =600,000

C02 =600,000

C03 =600,000

C04= 600,000

C05 = 600,000

Interest rate ( I ) = 8%

NPV = $2,395,626.02

PI  = $2,395,626.02/1,800,000 = 1.331

c.)

You can use a Financial calculator to find the IRR;

CF0 = -1,800,000

C01 =600,000

C02 =600,000

C03 =600,000

C04= 600,000

C05 = 600,000

CPT IRR = 19.86%

d.)

Based on the NPV rule, a company should accept a project if the NPV is greater than 0. This project's NPV of $595,626.02 meets this criteria , therefore, the project should be accepted.

Based on IRR rule, a company should accept a project if the IRR of the project is greater than the cost of capital; which is also the required return. The IRR of this project is 19.86% which is significantly higher than the cost of capital of 8% hence in agreement that the project should be accepted. The Profitability Index is also greater than 1 hence the project should be accepted.

8 0
3 years ago
If the government increases its spending when the economy is in an expansion, then the presence of automatic stabilizers:
artcher [175]
Hey there,

Answer:

It will decrease the government spending multiplier 

Hope this helps :D

<em>~Top</em>
6 0
3 years ago
Other questions:
  • The following information is available for Department X for the month of August: Work in process, August 1: Materials $ 8,480 Co
    14·1 answer
  • People need to analyze the health messages given by food ____ in order to be informed consumers.
    10·1 answer
  • Consider the following data: equilibrium price = $10, quantity of output produced = 100 units, average total cost = $13, and ave
    5·1 answer
  • Which innovation made the building and use of skyscrapers feasible?
    13·1 answer
  • 4. Problems and Applications Q4 A price change causes the quantity demanded of a good to increase by 12%, while the total revenu
    9·1 answer
  • What is the purpose of providing a ledger account for each account?
    8·1 answer
  • In total There is 50 states just so you know
    10·1 answer
  • A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and co
    9·1 answer
  • Why do nations often impose trade barriers that make it difficult for their own citizens to trade with people in another country
    15·1 answer
  • Suppose your company needs $24 million to build a new assembly line. Your target debt-equity ratio is .75. The flotation cost fo
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!