Answer:
A. Decrease
Explanation:
In investment appraisal with the method of Net Present Value, the bone of contention and the central matter is the TIME VALUE OF MONEY.
In the above scenario, the initial working capital was 100% released in proportions of 40%, 40% and 20%, throughout the 3 years of the project. However, if the reverse had been the case, i.e. parting with more cash now and the requirement of working capital now becomes: Year 0 = -10,000, Year 1 = - 10,000, Year 2 = -10,000, Year 3 = +30,000; the NPV would definitely shrink because the value of 10,000 each in Years 0-2 would not be the same when it is recovered from the project in year 3. The value will be smaller and hence the NPV of the project would have decreased as a result of the time value of money.
Answer:
An increase in the change in supply shifts the supply curve to the right, while a decrease in the change in supply shifts the supply curve left....
Answer:
Option A is the cheapest.
Explanation:
Giving the following information:
The engineering department estimates costs of $450,000 for the first year. It is estimated that if process and plant alterations are made, the waste treatment cost will decline $43,000 each year. As an alternative, a specialized firm, Hydro-Clean, has offered a contract to process the waste liquids for 15 years for $225,000 per year.
We need to use the following formula and chose the smallest net present value:
NPV= Io +∑ [Cf/(1+i)^n]
Option A:
Io= 407,000
Year cost= 43,000
NPV= 734,061
Option B:
Yearly cost= 225,000
NPV= 1,936,368
Answer: "structural unemployment".
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Answer:
The borrower is best off in situation <u>"a"</u> and the lender is best off in situation ▼ "C" .
Explanation:
Considering all the situations given in the options, the <u>borrower</u> is best in situation <u>a</u> and <u>lender</u> is best off in situation in <u>c</u>.
<u>Part a </u>
Real Interest rate = Nominal Interest rate - Inflation rate = 14 - 17 = -3 per cent. Thus, the purchasing power of money has fallen and the person has to pay back money with little purchasing power as compared to the value of the purchasing power at the time he borrowed money. Thus, borrowers are best off.Thus, <u>borrower</u> is best off when the inflation rate is very high.
<u>Part c</u>
Inflation rate is negative, thus the purchasing power of money will increase and lenders will get back money with higher purchasing power as compared to the value of the purchasing power of money at the time he lend the money. Thus, <u>lender </u>is best off when inflation rate is lowest.
