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zloy xaker [14]
2 years ago
7

Roman Knoze is considering two investments. Each will cost $20,000 initially. Project 1 will return annual cash flows of $10,000

in each of three years. Project 2 will return $5,000 in year 1, $10,000 in year 2, and $15,000 in year 3. Roman requires a minimum rate of return of 10%. What is the net present value of Project 2
Business
1 answer:
Artyom0805 [142]2 years ago
6 0

Answer:

NPV= $4,079.63

Explanation:

Giving the following information:

Initial cost= -$20,000

Rate of return= 10%

<u>To calculate the net present value, we need to use the following formula:</u>

NPV= -Io + ∑[Cf/(1+i)^n]

<u>First, we need to discount the cash flows:</u>

PV= Cfn / (1+i)^n

Cf1= 5,000/1.1= 4,545.45

Cf2= 10,000/1.1^2= 8,264.46

Cf3= 15,000/1.1^3= 11,269.72

Total PV= $24,079.63

Now, the NPV:

NPV= -20,000 + 24,079.63

NPV= $4,079.63

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Consider the following information for Maynor Company, which uses a periodic inventory system:
katrin [286]

Answer:

A. FIFO - 78 units and $7,770 and Cost of Goods Sold $12,738

B. LIFO - Inventory Valuation $7,312 and Cost of Goods Sold $13,196

C. Weighted Average - inventory Valuation $7,304 and Cost of Goods Sold $13,204

Explanation:

Detailed calculation as under:

<u>A. FIFO</u>

First 73 Units are sold from the inventory on May 1. Therefore, we first take the beginning inventory units and then we take the next in line purchases made during the period. In this case the first 34 units are completely taken and then out of the 44 units only 39 units are taken.

Next 68 units are sold from the inventory on October 28. Now we will take the remainder 5 units bought on March 28 (which are not yet sold). Then we take 63 units out of the 68 units purchased on August 22.

The company's ending inventory on FIFO Basis is remaining 5 units bought on 22 August and 73 units bought on 14 October. There total value is (5 x 94) + (73 x 100) = $7,770

Cost of Goods Sold = Total Goods Cost available for sale - Inventory ending valuation

$12,738 = $20,508 - $7,770

<u>B. LIFO</u>

First 73 Units are sold from the inventory on May 1. Therefore, we first take the units purchased on 28 March and then we take the beginning inventory. In this case the first 44 units are completely taken and then out of the 34 units only 29 units are taken.

Next 68 units are sold from the inventory on October 28. Now we will take the units bought on 14 October i.e. 68 units out of the 73 units bought.

The company's ending inventory on LIFO Basis is remaining 5 units in the beginning inventory, remaining 5 units bought on 14 October and 68 units bought on 22 August. There total value is (5 x 84) + (5 x 100) + (68 x 94) = &7,312

Cost of Goods Sold = Total Goods Cost available for sale - Inventory ending valuation

$13,196 = $20,508 - $7,312

<u>C. Weighted Average</u>

In order to calculate Weighted average cost method we divide the total cost of inventory (Beginning and Purchased) with the total units, this yields average cost per unit. Then we multiple the average cost per unit with the units remaining after sales. As shown below:

$20,508 / 219 = $93.64 per unit

$93.64 x 78 units = $7,304

8 0
3 years ago
Multiple choice!
kodGreya [7K]

Answer:

Spillover cost.

Explanation:

Spillover cost refers to those costs or changes in the value of a certain good that are caused by issues external to the intrinsic characteristics of said good. Thus, for example, external influences such as limitations on oil extraction or the development of electric cars can generate a massive drop in the prices of conventional gasoline cars. Another clear example of this situation is the one described in the question, where a negative change in a certain neighborhood can lower the prices of the houses found there.

7 0
2 years ago
A bank will often hold government securities as an asset. If a bank were to sell S500,000 in government securities to an individ
sleet_krkn [62]

Answer:a.

It would increase by $500,000 multiplied by the reciprocal of the required reserve ratio.

Explanation:

A bank will often hold government securities as an asset. If a bank were to sell S500,000 in government securities to an individual who paid for the bond in cash and the bank placed this cash in its vault, by how much would the money supply change as a result  -  It would increase by $500,000 multiplied by the reciprocal of the required reserve ratio.

The money supply is the entire stock of currency and other liquid instruments circulating in a country's economy and is given by the formula:

MONEY SUPPLY = RESERVES X MONEY MULTIPLIER

Therefore the bank reserves increasing in the scenario will increase money supplier by the effect of the money multiplier or the reciprocal of the required reserve ratio.

5 0
3 years ago
A marketing manager has just estimated that her firm's marginal revenue will become negative if a proposed price cut is made.
Viktor [21]

Answer:

D. More Units may be sold - but total revenue will be less than it would be at the higher price

Explanation:

Marginal Revenue (MR) represents the additional revenue that can be obtained if sales of a product are increased by one unit.

MR= is change in Total Revenue/Change in Total Output Quantity

In this situation as envisaged by the Marketing Manager, a price cut will lead to an increase in revenue based on more (marginal) units of the product sold at a lower price. The challenge, however, is that this increase in income will not be enough to offset the decrease in revenue that will result as a result of the price cut.

In other words, the organisation is better off selling fewer products or units at its current price than sell more (marginal units) at a reduced price.

7 0
3 years ago
The last department in a production process shows the following information at the end of the period: Units Beginning Work in Pr
Drupady [299]

Answer:

goojnb

Explanation:

fbbkkknb. ..kkjbbvfffdbh<em><u>v</u></em><em><u>b</u></em><em><u>b</u></em><em><u>n</u></em><em><u>n</u></em><em><u>m</u></em><em><u>m</u></em><em><u>j</u></em><em><u>j</u></em><em><u>h</u></em><em><u>b</u></em><em><u>b</u></em><em><u>b</u></em><em><u>h</u></em><em><u>h</u></em><em><u>h</u></em><em><u>h</u></em><em><u>h</u></em><em><u>h</u></em><em><u>h</u></em><em><u>v</u></em><em><u>v</u></em><em><u>b</u></em><em><u>n</u></em><em><u>m</u></em><em><u>m</u></em>

8 0
3 years ago
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