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irina [24]
3 years ago
15

Perit Industries has $110,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternat

ives are:
Project A Project B
Cost of equipment required $110,000 $0
Working capital investment required $0 $110,000
Annual cash inflows $20,000 $68,000
Salvage value of
equipment in six years $8,600 $0
Life of the project 6 years 6 years
The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries’ discount rate is 16%.
Required:
1. Compute the net present value of Project A.
2. Compute the net present value of Project B.
3. Which investment alternative (if either) would you recommend that the company accept?
Business
1 answer:
professor190 [17]3 years ago
4 0

Answer:

$-32,775.48

$185,710.69

Project B

Explanation:

Net present value is the present value of after-tax cash flows from an investment less the amount invested.  

NPV can be calculated using a financial calculator  

Only projects with a positive NPV should be accepted. A project with a negative NPV should not be chosen because it isn't profitable.  

When choosing between positive NPV projects, choose the project with the highest NPV first because it is the most profitable.

Project A  

Cash flow in year 0 = -$110,000

Cash flow in year 1 - 5 =  $20,000

Cash flow in year 6 = $20,000 +  $8,600 = 28,600

I = 16%

NPV = $-32775.48

Project B  

Cash flow in year 0 = -$110,000

Cash flow in year 1 - 5 =  $68,000

Cash flow in year 6 = $68,000 + $110,000 = $178,000

I = 16%

NPV = $185,710.69

Project B should be chosen because its NPV is positive

To find the NPV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.  

3. Press compute  

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The Bay Fig Corporation has $350,000 of taxable income from operations for the current year, and dividends of $50,000 received f
Natali5045456 [20]

Answer: $25,000

Explanation:

When a company owns less than 20% of another company and receives dividends from that company, they are allowed to deduct 50% of that dividend for tax purposes.

Bay Fig owns 10%(less than 20%) of the domestic corporations so qualifies for the 50% reduction:

= Dividends * 50%

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3 0
3 years ago
Lester's is a globally diverse company with multiple divisions and a cost of capital of 15.8 percent. Med, Inc., is a specialty
eimsori [14]

Answer:

both companies should invest because the NPV of both companies are positive

Explanation:

Net present value is the present value of after-tax cash flows from an investment less the amount invested.  

NPV can be calculated using a financial calculator  

Only projects with a positive NPV should be accepted. A project with a negative NPV should not be chosen because it isn't profitable.  

When choosing between positive NPV projects, choose the project with the highest NPV first because it is the most profitable.

Cash flow in year 0 = - $8.4 million

Cash flow in year 1-7 =  $2.2 million

NPV of Lester with I of 15.8% = 0.54 million

NPV of Med Inc with I of 13.7% = 1.12 million

To find the NPV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.  

3. Press compute  

0.54

1.12

5 0
3 years ago
Conduct research and create a 5 paragraph essay that explains how consumers can protect themselves from fraudulent and deceptive
snow_lady [41]

Answer: Reading the fine print: the producer would always make available fine print on their products which distinguishes them from other's, the consumer is expected to take note of that.

Explanation:

Fraudulent practise are being on the increase in business now, as many want to imitate firms and make gains out of their products. The following are what consumers can look out for to help them against this fraudulent practise.

1) Do not call list; the producer would make available how they can be reached and would want the consumer to reach them by such ways.

2) Reading the fine print: the producer would always make available fine print on their products which distinguishes them from other's, the consumer is expected to take note of that.

3) Terms and conditions: although this can be imitated but the producer has a unique way they would do theirs which the consumer should be aware of.

4) Personal information disclosures: when considering services, there will be need for releasing personal information, the customer should verify who they release information to.

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gavmur [86]
<span>major internal concerns that could affect the incorporation of social media into emergency management are:
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Because many people with bad intent could easily obtain their target's information through social media

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<span>-Staff may not be familiar with the applications
</span>The government need to put additional effort in training the staffs to utilize social media in emergency situations
4 0
3 years ago
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avanturin [10]
Answer would be %60.
7 0
3 years ago
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