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Vadim26 [7]
3 years ago
6

Suppose an industrial building can be purchased for $2,500,000 today and is expected to yield cash flows of $180,000 each of the

next five years. (Note: assume cash flows are received at end of year.) If the building is expected to be sold at the end of the fifth year for $2,800,000, calculate the IRR for this investment over the five year holding period
Business
1 answer:
krek1111 [17]3 years ago
7 0

Answer: 9.20%

Explanation:

Use Excel to find out the IRR.

Ensure that you write the purchase price in negatives as shown in the attached picture.

The cashflow for the last year will be the sum of the selling price and the cash flow.

= 2,800,000 + 180,000

= $2,980,000

IRR = 9.20%

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What happens to the Purchasing Power of Money, Prices and the Nominal Rate of Interest in CASE 1: the case of an increasing supp
velikii [3]

Answer:

Case 1: The purchasing power of money will decrease, prices will increase and nominal interest rate will decrease.

Case 2: The purchasing power of money will increase, prices will decrease and nominal interest rate will increase.

Case 3: The purchasing power of money will increase, prices will decrease and nominal interest rate will increase.

Case 4: The purchasing power of money will decrease, prices will increase and nominal interest rate will decrease.

Explanation:

Case 1: The purchasing power of money will decrease, prices will increase and nominal interest rate will decrease.

Case 2: The purchasing power of money will increase, prices will decrease and nominal interest rate will increase.

Case 3: The purchasing power of money will increase, prices will decrease and nominal interest rate will increase.

Case 4: The purchasing power of money will decrease, prices will increase and nominal interest rate will decrease.

3 0
3 years ago
Rachel recently started a new gift shop in town. When she is deciding how to price the new products in her shop, she measures th
valkas [14]

Answer:

The correct word for the blank space is: competitive.

Explanation:

Pricing strategies are methods companies use at the moment of setting the prices of their products. The most common pricing strategies are:

  • Cost-plus pricing.<em> Involves recognizing the production costs and adding a percentage of those costs which represents the profit of the firm. </em>
  • <u>Competitive pricing</u>.<em> Implies establishing the price of a product similar to what competitors in the market have set. </em>
  • Value-based pricing.<em> It requires setting the price of goods and services based on what consumers think the price should be. </em>
  • Price skimming.<em> Involves pricing a product high at first and changing the price according to market fluctuations. </em>
  • Penetration pricing.<em> Implies setting the price of a product low to wipe out competitors and raising it after they completely disappeared.</em>
7 0
3 years ago
Suppose the U.S. government imposes a quota on the number of Japanese-made cars allowed into the United States (the quota is set
Arturiano [62]

Answer:

The correct answer is c increase; remain the same.

Explanation:

Regardless of the motor market, in the technological world, audiovisual, sound and appliances, the Japanese country has evolved to become a huge world power sweeping the rest of the brands and filling all the sales lists. In addition, companies such as Toyota were gradually entering the forefront of the most Americanized and most popular vehicles in the United States. In 2007, the company displaced General Motors for the first time in the top of sales.

7 0
3 years ago
A theory asserts that consumers will purchase less of a good at higher prices than they will at lower prices.
FrozenT [24]

Answer:

b. It is likely that variables other than the price and quantity of cars demanded were

changing.

Explanation:

The law of demand states that the higher the price of a good, the lower the quantity demanded and the lower the price of a good, the higher the quantity demanded.

If price of cars was increasing and the quantity demanded also was increasing, it indicates other variables were changing. For example, if income was increasing at the time, the demand for cars would increase if cars are normal goods.

I hope my answer helps you

4 0
3 years ago
Blackwelder factory produces two similar products-small lamps and desk lamps. the total plant overhead budget is $640,000 with 4
olasank [31]

Answer: b. $188,800 Blackwelder Company will allocates $188,800 to desk lamp production if the actual direct hours is 118,000.

We have the following:

Total Plant Overhead = $640,000

Total Estimated Direct labour hours = 400,000 hours

Actual labour hours for desk lamp = 118, 000 hours

Overhead allocation rate = \frac{Total overhead}{Total estimated direct labor hours}

Overhead allocation rate = \frac{640,000}{400,000}

Overhead Allocation Rate =  $1.6

Factory overhead allocated = Overhead allocation Rate * Actual labour hours [/tex] [tex] Factory overhead allocated = $188,800 (1.6 * 118,000)

3 0
3 years ago
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