Answer: A. He will quite certainly gain approval since the project has a positive net present value.
Explanation:
The options are:
A. He will quite certainly gain approval since the project has a positive net present value.
B. Approval is probable but not likely as he failed to account for the time value of money.
C. He will not gain approval as he failed to consider whether the project is leading edge or not.
D. Approval is probable but not likely as the project has been constructed on estimates instead of facts.
Capital budgeting is used to know whether the long term investment for a particular organization's is actually worth investing in or not by the company.
Based on the scenario in the question, since the present value of the estimated future cash flows is greater than the cost of the project, Ashton will quite certainly gain approval since the project has a positive net present value.
Answer:
A. Forecast for July = 42.
B. Forecast for August = 42.45
C. Because of seasonality in the banking industry.
Explanation:
A. Forecast for July = Forecast for June + Smoothing constant x (Forecasting error)
= 42 + 0.15 (42-42) = 42
B. Forecast for August = Forecast for July + 0.15 (Forecasting error)
= 42 + 0.15 (45-42) = 42.45
C. Because there is a great deal of seasonality in the processing requirements of banking industry, this forecasting method (exponential smoothing) might not be appropriate for this situation.
1.) A
2.) True
3.) False
4.) C
5.) C
6.) True
7.) True
8.) C
9.) True
10.) True
Answer:
The marginal benefit from selling the vane without restoring it is $200.
Explanation:
Marginal benefits are the extra income a company can get from selling one additional unit of production.
Zane had already spent $250 in purchasing the vane and the restoration process.
Zane has two options:
- Sell the vane as it is for $200.
- Keep restoring the vane, spend $200 more and sell the vane for $500.
If Zane decides to sell the vane as it is, his marginal benefit will be $200. That would not be enough to cover his costs, this transaction will result in a $50 loss.
If Zane decides to continue the restoration, then his marginal costs will be $200 extra, but his marginal benefit would be $500. If he chose this option he could end up earning a $50 profit.
