If a consumer chooses not to perceive they are reaching _______

Project Q has an initial cost of $257,412 and projected cash flows of $123,300 in Year 1 and $180,300 in Year 2. Project R has a

ss7ja [257]

Answer:

b) Accept Project R and reject Project Q

Explanation:

We can use the following method to solve the given problem in the question

We are given

Project Q: Initial Cost = $ 257,412

Projected Cash Flows: Yr 1 : $ 123,300 Yr 2 : $ 180,300

Total Present Value of all the Future Cash Flows using 12.2% as Rate of Return

= 123,300/1.122 + 180,300/(1.122*1.122)

= 109,893 + 143,222

= $ 253,115

Profitability Index = Total Present Values of all Cash Inflows / Initial Investment

= 253,115 / 257142 = 0.98

Since the Initial Investment is greater than the Present Value of Cash Inflows, that is, l Profitability Index < 0 the Project should not be selected.

Project R: Initial Cost = $ 345,000

Projected Cash Flows: Yr 1 : $ 184,500 Yr 2 : $ 230,600

Total Present Value of all the Future Cash Flows using 12.2% as Rate of Return

= 184,500/1.122 + 230,600/(1.122*1.122)

= 164,438.5 + 183,178

= $ 347,616.5

Profitability Index = Total Present Values of all Cash Inflows / Initial Investment

= 347,616.5 / 345,000 = 1.01

Since the Initial Investment is lower that the Present Value of the Cash Inflows, that is, Profitability Index > 0 the Project should be selected.

Accept Project R and Reject Project Q, so option B is the correct answer

8 0

3 years ago

Which of the following is NOT a federal income tax deduction?

11Alexandr11 [23.1K]

Answer: a)

Explanation: All the others are deductible, whilst excise taxes are only deductible as a business expense.

8 0

3 years ago

Miltmar Corporation will pay a year-end dividend of $3, and dividends thereafter are expected to grow at a constant rate of 5% p

motikmotik

Part a: The market capitalization rate is 9.25%

Part b: The intrinsic value of the stock is $70.59

Market capitalization rate is another name for the stock's required rate of return. It is called the market capitalization rate because we can infer it by observing the market value of the stock. One way to find this rate is the capital asset pricing model (CAPM).

Part a:

Let,

r = market capitalization rate

f = risk free rate = 5%

m = return on the market = 10%

We can find the market capitalization rate with the help of the capital asset pricing model (CAPM),

$r=f+\beta *(m-f)\\ r=0.05+0.85*(0.1-0.05)\\ r=9.25\%\\$

The market capitalization rate is 9.25%.

Part b:

Let,

D be the dividend expected = $3

r be the interest rate = 9.25%

g = growth rate of dividends = 5%

The price is given by the dividend growth model:

$Price=\frac{D}{r-g}\\ Price=\frac{3}{0.0925-0.05}\\ Price=\$70.59\\$

The intrinsic value of the stock is $70.59

Learn more about CAPM:

brainly.com/question/15548553

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8 0

1 year ago

The Karaoke Channel Online streams professional-grade karaoke for $9.95 a month. Suppose Karaoke Channel Online has a constant m

Alenkinab [10]

The total profit is 10000

8 0

3 years ago

When planning menu name and define 3 processes we establish after choosing menu items

Leona [35]

Photo of the foods and put the price and name of it

7 0

3 years ago

If a consumer chooses not to perceive they are reaching ________.