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Yanka [14]
3 years ago
15

You own a coal mining company and are considering opening a new mine. The mine will cost $120 million to open. If this money is

spent immediately, the mine will generate $20 million for the next 10 years. After that, the coal will run out and the site must be cleaned and maintained at environmental standards. The cleaning and maintenance are expected to cost $2 million per year in perpetuity. What does the IRR rule say about whether you should accept this opportunity
Business
1 answer:
GalinKa [24]3 years ago
4 0

Answer: B. There are two IRRs so you cannot use the IRR as a criterion for accepting the opportunity.

Explanation:

The Internal Rate of Return can be useful in capital budgeting to enable a company know if an investment will be profitable. It is defined as the discount rate that causes the Net Present Value(NPV) to be zero. If the IRR is greater than the required return then the project should be accepted as it will have a profitable NPV.

IRR has some problems however and one of them is reflected here. There can sometimes be two IRRs and when this happens, using IRR as a viability measure cannot be done because a single rate is needed for comparison with the required return.

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James Corporation owns 80 percent of Carl Corporation's common stock. During October, Carl sold merchandise to James for $307,00
Arturiano [62]

Answer:

$69,075

Explanation:

James Corporation

Merchandise remaining in James’s inventory:

$307,000 × 50% = $153,500

Intra-entity gross profit:

$153,500 × 45% = $69,075.

James’s ownership percentage of Carl will have no impact on this computation.

Therefore the amount of intra-entity gross profit in inventory at December 31 that should be eliminated in the consolidation process is $69,075

7 0
3 years ago
Question 7 of 10
Ipatiy [6.2K]
D is the answer I’m sure of it
4 0
2 years ago
Vaughn Manufacturing incurred the following costs for 84000 units: Variable costs $504000 Fixed costs 392000 Vaughn has received
Damm [24]

Answer:

$7.8

Explanation:

Variable costs = $504,000

Fixed costs = $392,000

Number of units produced = 84,000

Shipping charges = $4,500

Therefore, the variable cost per unit is calculated as follows:

= Variable costs ÷ Number of units produced

= $504,000 ÷ 84,000

= $6 per unit

Incremental fixed cost per unit (For 2,500):

= Shipping cost ÷ 2,500

= $4,500 ÷ 2,500

= $1.8 per unit

Therefore, the unit sales price will be the sum total of variable cost per unit and incremental fixed cost per unit for the shipping charges.

BEP (in sales price per unit):

= Variable cost per unit + incremental fixed cost per unit

= $6 + $1.8

= $7.8

4 0
3 years ago
What term describes work done by nonprofessionals?
Romashka [77]

What sets a professional work and nonprofessional work is the kind of education and experience that the maker has. Professional work usually entails work done with those who have licenses and proper education background. Meanwhile, these forms of art are work done by nonprofessionals who has not undergone extensive education rather they got these skills by pure experience. Folk art, Naïve art, Intuitive art, and Outsider art are done by nonprofessionals.

<span>Therefore the answer to this question is<span> “All of these answers are correct”.</span></span>

3 0
3 years ago
A company receives a 10%, 120-day note for $1, 500. The total interest due on the maturity date is:______.a) $50,00. b) $150,00.
Leto [7]

Answer:a) --A -$50.00

Explanation:

Using days of year = 360 days

Interest due = Principal  x rate  x period

           = $1500 x 10% x 120/360

   = $50

The total interest due on the maturity date is:__$50.00___

6 0
3 years ago
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