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Likurg_2 [28]
3 years ago
13

considering remodeling the office building. The costs are estimated at $2.8 million. After the building is remodeled, Delta expe

cts an additional income of $820,000/year for the next 5 years. The discount rate is 12.5%. What is the benefit of the project to Delta LLC, in today's $ value
Business
1 answer:
fomenos3 years ago
5 0

Answer:

the benefit of carrying out the project is $119,666 in today's $

Explanation:

initial outlay = -$2,800,000

cash flow 1 = $820,000

cash flow 2 = $820,000

cash flow 3 = $820,000

cash flow 4 = $820,000

cash flow 5 = $820,000

discount rate = 12.5%

NPV = -$2,800,000 + $820,000/1.125 + $820,000/1.125² + $820,000/1.125³ + $820,000/1.125⁴ + $820,000/1.125⁵ = $119,666

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Proposal #2 would establish local collection centers throughout the region to decrease the time it takes to convert credit payme
mezya [45]

Answer: a. $120,000

b. $6,000

c. Yes

Explanation:

a. It is said that the collection centres would help reduce the collection time by 2 days and that every day $60,000 comes in.

If the proposal will reduce the amount of time taken to collect by 2 days then that means that the amount freed up is the amount that they would have collected in two days had it not been for the system.

That amount would be,

= $60,000 * 2

= $120,000

b. If they used this free up cash to pay off a debt that was accumulating 5% per year then the 5% will be saved.

The amount saved therefore is,

= 120,000 * 5%

= $6,000

By retiring a $120,000 that was accruing $6,000 a year, the proposal has enabled that $6,000 to be saved instead.

c. The cost of implementing this proposal is $5,200 per year and yet the savings it gives in interest is $6,000.

As the savings are higher than the cost, the number definitely suggest that the project should be implemented because it is more beneficial than it costs.

8 0
3 years ago
Craig's collected $15,000 from customers for games played in july. craig's sold bowling merchandise inventory from its pro shop
tekilochka [14]

Answer:

cash 15,000 debit

  account receivables 15,000 credit

cash  3,000 debit

A/R    5,000 debit

  service revenue 8,000 credit

COGS  6,800 debit

   Merchandise   6,800 credit

Cash  4,000 debit

 A/R               4,000 credit

Cash   2,500 debit

  *unearned revenue   2,500 credit

**utilties payable   800 debit

       cash                   800 credit

salaries expense 3,500 debit

      cash                      3,500 debit

***prepaid expene        375  debit

prepaid insurance   1,125  debit

     cash                             1,500 credit

repairs expense      700 debit

      cash                           700 credit

utilities expense      900 debit

   utilities payable            900 credit

Explanation:

We will record following the debit = credit rule

* It will be considered unearned revenue as we didn'0t perform the services we have the obligation to do so therefore, it is a liability.

**as the expense was recorded previously a payable was created to recognize the obligation to pay our utilities. Therefore, we write-off the payable

*** 1,500 is the full contract value for 4 months:

1,500 / 4 = 375 per month

one most is declared as expense and the remainder as prepaid.

7 0
3 years ago
John Hernandez is 24 years old and has saved enough money to fund an adequate emergency fund. In addition, he has saved $5,600 t
poizon [28]

Answer:

C. Growth

Explanation:

Starting investment early is something that is always encouraged and that is the case of John Hernadez here. By starting early, before he retires, he'd have been able to grow is investment portfolio substantially and even be a millionaire by the time of his retirement. Growth is the most important factor for John, that's why is he's starting his investment early. With the time given for growth, investment value may increase in value and it allows time for appreciation of stock price.

4 0
3 years ago
Read 2 more answers
The last dividend paid by Wilden Corporation was $1.55. The dividend growth rate is expected to be constant at 1.5% for 2 years,
shtirl [24]

Answer:

e)  $37.05

Explanation:

Using the dividend growth model, the value of a stock is the present value of the future dividends receivable discounted at the required rate of return . The required rate of return is given as 12%.

So we discount the year 3 dividend using the dividend growth model formula

P = D (1+g)/r-g

r- rate of return, g = growth rate

Present value of the future dividends:

PV of Year 1 = 1.55(1.015)m × 1.12^(-1)

                     = 1.4047

PV of Year 2 = 1.55 (1.015)(1.015) × 1.12^(-2)

                     =  1.27

PV of Year 3 (this will be done in two steps)

Step 1; PV (in yr 2) of year 3 dividend

= (1.55)(1.015)^2×(1.08)/(0.12-0.08)

=43.114

Step 2 : PV (in yr 2) of year 3 dividend

  =43.114 × (1.12^(-2))

   = 34.37

Best estimate of stock = 1.40 + 1.27 +34.37

                                       = $37.05

Note

To discount the year 3 dividend, we use two steps. The first stp helps get the PV in year 2, and step 3 helps to take it further to the PV in year 0

         

8 0
3 years ago
The reduction of on the job injuries and illnesses would benefit employers, because they would
marusya05 [52]
B is the correct answer.
8 0
3 years ago
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