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poizon [28]
3 years ago
5

Sister Pools sells outdoor swimming pools and currently has an aftertax cost of capital of 11.6 percent. Al's Construction build

s and sells water features and fountains and has an aftertax cost of capital of 10.3 percent. Sister Pools is considering building and selling its own water features and fountains. The initial cash outlay for this project would be $80,000. The expected net cash inflows are $17,000 a year for seven years. What is the net present value of the Sister Pools project
Business
1 answer:
Aloiza [94]3 years ago
8 0

Answer:

$1,952 (Positive NPV)

Explanation:

Year   Annual CF ($)   PV factor at 10.30%    PV of Cash Flow ($)

1               17,000                  0.90662                         15,413

2              17,000                  0.82196                          13,973

3              17,000                   0.74520                         12,668

4              17,000                   0.67561                          11,485

5              17,000                   0.61252                          10,413

6              17,000                   0.55532                          9,441

7              17,000                    0.50347                          8,559

TOTAL                                    1.73554                          81,952

Net Present Value (NPV) = Present value of annual cash flows - Initial Cost

Net Present Value (NPV) = $81,952 - $80,000

Net Present Value (NPV) = $1,952 (Positive NPV)

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Saturn Industries purchased and consumed 64,000 gallons of direct material that was used in the production of 17,000 finished un
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Explanation:

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<em>Step 1: Work out the standard price of material  using the material usage variance</em>

Standard price = Material usage variance/(standard quantity of material - actual quantity)

Standard quantity of material = standard qty per unit × actual production

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Standard price =  2,800/(68,000-64,000)= $0.7

<em>Step 2 : Work out the Actual material price using the material price variance</em>

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Serggg [28]

Answer:

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Weighted average cost of capital (WACC) is the company's cost of capital based on its proportion of equity and debt used in its capital structure. It can be used as the discount rate for calculating the present value of future expected cashflows of a project if the project is determined to be of similar risk to the company's operations; meaning that the estimated beta of the project is the same as the beta of the firm.

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Current ratio of 3.4 and an acid-test ratio of 2.8. The corporation's current assets consist of cash, marketable securities, acc
Sav [38]

Answer:

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Explanation:

The computation is shown below:

As we know that

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