Answer:
(a) What is the net present value of this potential investment?
Net present value of Investment is $(3,903)
(b) Should you invest in this machine?
We should not invest in this investment because Net present value of this investment is negative by discounting Minimum acceptable rate of return.
Explanation:
Present Values:
Revenue $144,146
O&M Cost ($48,049)
Initial Investment <u>$(100,000)</u>
Net Present value $(3,903)
Working :
Present Value Calculation = P x ( (1- ( 1 + r )^-10) / r
Revenue = $21,000 x ( (1- ( 1 + 0.075 )^-10) / 0.075 = 144,146
O&M Costs = $7,000 x ( (1- ( 1 + 0.075 )^-10) / 0.075 = 48,049
Answer:
Degree of Financial Leverage = 0.64
Explanation:
Degree of Financial leverage refers to the proportion of debt in the capital structure of a company. It also signifies earnings for shareholders i.e per share earnings of shareholders (EPS) with respect to operating income earned by a company.
In the given case, eps before = $1.25
eps afterwards = $1.37
Degree of financial leverage is expressed as:
Wherein,
EPS = Earnings per share
EBIT = Earnings before interest and taxes
Percentage change in EPS = 
= 9.6%
Percentage change in EBIT = 15%
Hence Degree of Financial Leverage = 
= 0.64
Answer:
The correct answer is letter "D": dividends.
Explanation:
A Dividend is a corporate cash payout to its stakeholders. It is a form to distribute earning among investors who profit from the ownership of stocks. The payment is proportional to the number of stocks investors have and the price companies pay per share -usually fixed. Those payments could be provided quarterly, semi-annually, or once a year.
Answer:
2) Chemotherapy for cancer patients
Explanation:
Chemotherapy for cancer patients is a basic necessity needed for the patient to continue living, so if the price of chemotherapy increases or decreases will not affect the patient's choice of getting it. What can affect the patient's decision is whether he/she can afford the treatment, but even if he/she can't they will seek other ways of trying to obtain it, e.g. going to public hospitals.
An economic system is a means by which societies or governments organize and distribute available resources, services, and goods across a geographic region or country.
