Answer:
a) should install the solar cells
alternative 1, solar cells
initial investment $18,000
annual expenses $2,400 (5 years)
NPV = $27,097.89
AW = (10% x $27,097.89) / [1 - (1 + 10%)⁻⁵] = $7,148.36
alternative 2, power line
initial investment $27,500
annual expenses $1,000 (5 years)
NPV = $31,290.79
AW = (10% x $31,290.79) / [1 - (1 + 10%)⁻⁵] = $8,254.43
b) $23,307.10
Owen plans to open Owen's Pets Store, a pet supplies outlet, and to hire Quinn and Ruth. Owen will invest only his own money. He does not expect to make any profit for at least two years and to make almost no profit for the first three years, but he hopes to expand eventually. Which form of business organization would be most appropriate Owen employs few workers and is not expected to earn profit for the first few years. Although, he still hopes to expand his outlet. In this case, a sole proprietorship is the best option because it is easier and cheaper to start a company. The business owner is free to make all decisions without any consultations. The sole proprietorship earns moderate profits and does not require huge funds in the near future. Owen employs only Quinn and Ruth to run the pet store, which means that it is a comparatively small outlet and does not require huge funds for its financing. Owen will enjoy one more advantage of paying a single tax. This means that the owner (Owen) is required to pay tax either on profits or personal income. This is because, in this organization, the owner and the business are the same entity. The earnings from the business are the personal income of the owner.
<h3>What is
business organization?</h3>
The word "business organization" refers to the organizational structure of businesses and how such structure aids in achieving their objectives. Businesses are often built to concentrate on either making a profit or helping society. A company is considered a for-profit entity when it prioritizes making money. An organization is referred to as a nonprofit (or not-for-profit) organization and is not often called a business when it aims to further the social good through the arts, education, health care, or some other sector.
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The nominal interest rate will rise by 3%.
Nominal interest rate is the sum of real interest rate and inflation rate. Real interest rate is interest rate that has been adjusted for inflation. Inflation is the persistent rise in general price levels.
Nominal interest rate in year 2 = real interest rate + inflation rate
6% + 3% = 9%
Nominal interest rate in year 1 = 6%
Change in nominal interest rate = 9% - 6% = 3%
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