Based on the amounts that you are offered and their present values, the offer you should pick is Birr 10,000 in 12 years.
<h3>Which offer should you pick?</h3>
You should pick the offer with the highest present value.
Offer 1 present value:
= Birr 1,000
Offer 2 present value:
= 10,000 / (1 + 11%)²
= Birr 2,858
Offer 3 present value:
= 25,000 / (1 + 11%)³
= Birr 1,840
In conclusion, option 2 has the highest present value and so should be picked.
Find out more on present value calculations at brainly.com/question/27821989.
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Answer:
d. Choose Option B because it has a higher NPV
Explanation:
The computation is shown below:
For Option A:
Investment = $10 million
Present Value of cash flows = Cash flow ÷ Discounting rate
= $2 ÷ 10%
= $20 million
Now
NPV = $20 - $10
= $10 million
We know that
IRR is the rate at which the NPV will be zero
So, 2 ÷ r - 10 = 0
r = 20%
For Option B:
Investment = $50 million
Present Value of cash flows = $6.5 ÷ 10% = $65 million
NPV = $65 - $50 = $15 million
we know that
IRR is the rate at which the NPV will be zero
So, 6.5÷ r -50 = 0
r = 13%
Based on NPV, Option B should be selected as it contains higher NPV as compared to option A.
However, Based on IRR, Option A should be chosen as it contains higher IRR and a higher IRR represent a higher profit percentage
Answer:
The correct answer is D.
Explanation:
Giving the following information:
Total Variable manufacturing costs 288,000
Unitary variable costs= 288,000/24,000= $12
Rhythm Company has offered to purchase 3,000 IT-54s at $16 each. No variable selling costs will be incurred.
Because it is a special offer and there is available capacity, we will not have into account the fixed costs.
Effect on income= 3,000*(16-12)= $12,000 increase
Answer:
The answer is option D
Explanation:
The bond can be issued at par, at a discount or at a premium depending on the coupon rate and the market interest. The price of the bond which pays semi annual coupon can be calculated using the formula of bond price. The formula to calculate the price of the bond is attached.
First we need to determine the semi annual coupon payment, periods and YTM.
Semi annual coupon payments = 2000000 * 0.1 * 6/12 = 100000
Semi annual periods = 5 * 2 = 10
Semi annual YTM = 0.08 * 6/12 = 0.04
Bond Price = 100000 * [(1 - (1+0.04)^-10) / 0.04] + 2000000 / (1+0.04)^10
Bond Price = $2162217.916
The price of the bond is thus $2162290 approx. The difference in answers is due to rounding off.
Answer:
free rider
true
true
Explanation:
The free rider problem is a form of market failure. It occurs when people benefit from a good or service of communal nature and do not pay to enjoy these services.
Downtown abbey can be classified as a public good, if it is made a private good, the problem would be solved
A public good is a good that is non excludable and non rivalrous.
A private good is a good that is excludable and rivalrous. They are usually exchanged in the market by private sector businesses. It
