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Over [174]
3 years ago
7

A firm is considering an investment in a new advertising project. The project will produce a cash flow of $1,000 in one year and

it will produce a cash flow of $15,000 two years from now. The firm has a required return of 11%. You are the manager of the advertising department and you estimate that the cost of this project is $13,000 today. Do you recommend that the firm accept this project
Business
1 answer:
timofeeve [1]3 years ago
6 0

Answer:

The fact the investment opportunity has a positive cash flow means that the project should be accepted since it is value-adding

Explanation:

We can evaluate the acceptability of the project using the net present value approach. The net present value is the present value of future cash flows discounted at the 11% required rate of return.

Present value=future cash flow/(1+required rate of return)^n

n is the year in which the cash flows are expected, it is 1 for year 1 cash flow and 2 for year 2 cash flow

NPV=$1,000/(1+11%)^1+$15,000/(1+11%)^2-$13,000

NPV=$75.24

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Question Workspace Productivity a. is nearly the same across countries, and so provides no help explaining differences in the st
laiz [17]

Answer:

The correct answer is letter "D": explains most of the differences in the standard of living across countries.

Explanation:

Productivity is an economic term that describes the relationship between output and inputs needed to produce those outputs. It measures effectiveness. The total production of a country given a period is calculated in its Gross Domestic Product (GDP).

When the GDP is divided by the total population of a country it is called GDP per capita which reflects the average expenditure of individuals. This metric allows having an idea of what the lifestyles of those people are. Usually, <em>smaller wealthy countries such as Switzerland have higher GDP per capita showing a better quality of life.</em>

6 0
3 years ago
You invest $600 in security A with a beta of 1.5 and $400 in security B with a beta of 0.90. The beta of this portfolio is _____
klio [65]

Answer:

Beta= 1.26

Explanation:

<u>First, we will calculate the proportion of the portfolio of each security:</u>

Security A= 600/1,000= 0.6

Security B= 400/1,000= 0.4

<u>Now, the beta of the portfolio:</u>

Beta= (proportion of investment A*beta A) + (proportion of investment B*beta B)

Beta= (0.6*1.5) + (0.4*0.9)

Beta= 1.26

7 0
3 years ago
The Murdock Corporation reported the following balance sheet data for 2018 and 2017: 2018 2017 Cash $ 90,695 $ 30,155 Available-
Klio2033 [76]

Answer:

Prepare the Cash flow from Operating Activities Section as follows :

Net income                                                                     62,000

Adjustments for Non - Cash Items :

Depreciation - Land, buildings, and equipment          38,000

Adjustment for Working Capital Items :

Increase in Accounts Receivable                                 (12,950)

Increase in Inventory                                                     (21,200)

Decrease in Prepaid Insurance                                          620

Decrease in Accounts payable                                    (73,530)

Decrease in Salaries payable                                        (5,700)

Decrease in Notes payable                                          (51,200)

Net Cash from Operating Activities                             (63,960)

Explanation:

Note that the question has requested use of indirect method for preparation of cash flows from operating activities.

6 0
2 years ago
What's the u.s national debt?
otez555 [7]
America's national debt is the amount that is due to the federal government of America. The portion of the public debt is the price of the dominant Treasury securities at a part of time that has been announced by the Treasury and also with other federal government agencies.
3 0
2 years ago
On July 1, Aloha Co. exercises a call option that requires Aloha to pay $224,400 for its outstanding bonds that have a carrying
skelet666 [1.2K]

Answer:

Date                 Account title                                              Debit             Credit

July 1                Bonds Payable                                      $220,000

                        Premium on Bonds Payable                  $8,200

                        Cash                                                                            $224,400

                        Gain on retirement of bond                                       $3,800

<u />

<u>Working:</u>

Premium = Carrying value - Par value

= 228,200 - 220,000

= $8,200

Gain on retirement of bond = Carrying amount - Amount paid:

= 228,200 - 224,400

= $3,800

3 0
2 years ago
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