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3 years ago

Solo Corp. is evaluating a project with the following cash flows:

Business

1 answer:

pychu [463]3 years ago

8 0

Answer and Explanation:

The computation of MIRR under the following methods are shown below:

a. Using the Discounting Approach:

Interest Rate = 8%

The Present Value of Cash Outflows os

= -$28,100 - $8,500 ÷ 1.08^5

= -$33,884.96

Now

Let us assume the MIRR be i%

So,

0 = -$33,884.96 + $10,300 ÷ (1 + i) + $13,000 ÷ (1 + i)^2 + $14,900 ÷ (1 + i)^3 + $12,000 ÷ (1 + i)^4

Now use the financial calculator, after using it i is 17.18%

Thus, MIRR is 17.18%

b. Using the Reinvestment Approach:

Interest Rate = 8%

The Future Value of Cash Flows is

= $10,300 × 1.08^4 + $13,000 × 1.08^3 + $14,900 × 1.08^2 + $12,000 × 1.08 - $8,500

= $52,228.65

Let us assume MIRR be i%

So,

0 = -$28,100 + $52,228.65 ÷ (1 + i)^5

(1 + i)^5 = 1.85867

1 + i = 1.1320

i = 0.1320

= 13.20%

Thus, MIRR is 13.20%

c. Using the Combination Approach:

Interest Rate = 8%

Present Value of Cash Outflows is

= -$28,100 - $8,500 ÷ 1.08^5

= -$33,884.96

And,

Future Value of Cash Inflows is

= $10,300 × 1.08^4 + $13,000 × 1.08^3 + $14,900 × 1.08^2 + $12,000 × 1.08

= $60,728.65

Let us assume MIRR be i%

So,

0 = -$33,884.96 + $60,728.65 ÷ (1 + i)^5

(1 + i)^5 = 1.7922

1 + i = 1.1238

i = 0.1238

= 12.38%

Thus, MIRR is 12.38%

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Explanation:

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4 years ago

Three individuals, Mary, Jack and Helen, make up the total demand for donuts per month in a particular market.

Paraphin [41]

The market demand curve would be 1000 - 0.125Q.

<h3>How to calculate the demand curve?</h3>

It should be noted that the market demand curve will be the sum of the individual demand curve.

The market demand curve will be calculated thus. Mary’s demand curve is 5P = 5000 – 1.25QM. Here, p = 1000 - 0.25QM

Jack’s demand curve for donuts is given by P = 1000 – 0.5QJ. Helen’s demand curve is given by QH = 2000 – 2P. This will be P = 1000 - 0.5QH.

The slope will be:

= 0.5 × 0.25

= 0.15

The demand function of Jack and Helen are the same. The demand curve will be 1000 - 0.125Q.

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2 years ago

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Answer:

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The expenses which are paid by cash reduced the cash balance displayed in the balance sheet . Like interest to creditors, stockholders dividend, wages expenses, miscellaneous expenses, admin expenses, etc. These expenses can be paid either by cash or by bank account .

But the depreciation expense is a non - cash expense which reduces the fixed asset balance over the fixed asset useful life. Plus this is shown in the income statement on the debit side. Like this other examples would be goodwill impairment, amortization expenses, etc.

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3 years ago

Palin Inc., an electronics manufacturer, is headquartered in Texas. The firm shifted its operations from Texas to China due to l

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Answer: Offshoring.

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3 years ago

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