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Diano4ka-milaya [45]
3 years ago
7

To increase productive capacity, a company is considering a proposed new plant. Which of the following statements is CORRECT? a.

When estimating the project's operating cash flows, it is important to include both opportunity costs and sunk costs, but the firm should ignore the cash flow effects of externalities since they are accounted for in the discounting process. b. Since depreciation is a non-cash expense, the firm does not need to deal with depreciation when calculating the operating cash flows. c. The cost of capital used to discount cash flows in a capital budgeting analysis should be calculated on a before-tax basis. d. Capital budgeting decisions should be based on before-tax cash flows. e. In calculating the project's operating cash flows, the firm should not deduct financing costs such as interest expense, because financing costs are accounted for by discounting at the cost of capital. If interest were deducted when estimating cash flows, this would, in effect, "double count" it.
Business
1 answer:
Ganezh [65]3 years ago
6 0

Answer:

e. In calculating the project's operating cash flows, the firm should not deduct financing costs such as interest expense, because financing costs are accounted for by discounting at the cost of capital. If interest were deducted when estimating cash flows, this would, in effect, "double count" it.

Explanation:

Weighted average cost of capital (WACC) is a calculation that takes into consideration all cost associated with capital obtained to finance a company.

This also includes cost such as interest expense.

In the given scenario when calculating the project's operating cash flow it is important to exclude such financing costs since they have been considered in the WACC calculation.

It will be a double deduction if it is considered again in operating cash flow calculation.

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jekas [21]

Answer:

Using the campaign influence related list on the opportunity.

Explanation:

By using the campaign influence related list on the opportunity a sales user can relate an opportunity to the campaign. With the help of campaign influence, the person will be allowed to other person campaigns listed on an opportunity. A person must hire a person for a role in the opportunity. A hired person will be an expert in doing so therefore the productivity will also be rise by hiring the expert.

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3 years ago
Jill Parker owns​ 2,000 acres of ranchland in Iowa.​ Recently, a supply of natural gas was discovered on her property. Not knowi
jek_recluse [69]

Answer: C. Jill should focus on the business market and license the natural gas rights.

Explanation:

Option C is indeed the right answer. Focusing on the Business Market will get her a better deal because larger companies will be involved.

It would be very advantageous to license the rights as there will be various bids for the license with the largest bid getting it and only for a period of time.

Going with this option can get Jill a better deal all round.

6 0
3 years ago
Read 2 more answers
Hello? kingston? are you there?
sineoko [7]
Yes ma’am what can I do for you
5 0
3 years ago
Assume that the risk-free rate of interest is 3% and the expected rate of return on the market is 15%. I am buying a firm with a
kondor19780726 [428]

Answer:

The correct solution is "$6,564.01". A further solution is given below.

Explanation:

The given values are:

beta,

= 1.6

market return,

= 15%

cash flow,

= $2,000

risk free rate of interest,

= 3%

Now,

The stock return will be:

= 3+ 1.6\times (15-3)

= 3+ 1.6\times 12

= 22.2 \ percent

The actual worth of the firm will be:

= \frac{cash \ flow}{rate \ of \ return}

= \frac{2000}{22.2 \ percent}

= \frac{2000}{0.222}

= 9,009

With 0.8 beta, the stock return will be:

= 3+ 0.8\times (15-3)

= 3+ 0.8\times 12

= 12.6 \ percent

So that I'm paying for the firm,

= \frac{2000}{12.6 \ percent}

= \frac{2000}{0.126}

= 15,573.01 ($)

Hence,

I'm paying,

= 15,573.01-9,009

= 6,564.01 ($)

6 0
3 years ago
The balance sheet of Mister Ribs Restaurant reports current assets of $36,000 and current liabilities of $18,000. Calculate the
AveGali [126]

Answer:

2

Explanation:

The current ratio is a measure of a company's ability to pay its current liabilities as they mature. It is a liquidity ratio. The formula for calculating the current ratio is current assets divide by current liabilities.

i.e., the current ratio = current assets/ current liabilities

For Mr. ribs restaurant.

current ratio = $36,000/ $18000

current ratio = 2

<u>Whether current ration will increase or decrease</u>

a).<u> paid cash $4500 for a new oven</u>

current assets will decrease by $4500. new ratio will 31000/18000

which is 1.75. The oven is not a current asset.

The current ration will decrease

b<u>). Received cash  $4,500 as a contribution from an investor</u>

Increases cash but does not affect liabilities since stocks are not debts. new ration $40,500/ $18000= 2.25.

Increases the current ratio

c). <u>Borrowed $8,280 cash from a bank, issuing a note that must be repaid in three yea</u>rs.

Increased cash by $8250 and current liabilities by $2750($ 8,250/3)

New ratio = $44,250/20,750= 2.13.

Increases current ratio

d)<u>Purchased $700 of napkins, paper cups, and other disposable supplies on account</u>.

Reduces current assets (cash) by $700,  disposable napkins, paper cups can not be classified as assets. The action does not affect liabilities since they were paid for in cash. new ratio =$ 35,300/ $18,000 = 1.96:

Reduces current ratio

3 0
3 years ago
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