Answer:
d. Choose Option B because it has a higher NPV
Explanation:
The computation is shown below:
For Option A:
Investment = $10 million
Present Value of cash flows = Cash flow ÷ Discounting rate
= $2 ÷ 10%
= $20 million
Now
NPV = $20 - $10
= $10 million
We know that
IRR is the rate at which the NPV will be zero
So, 2 ÷ r - 10 = 0
r = 20%
For Option B:
Investment = $50 million
Present Value of cash flows = $6.5 ÷ 10% = $65 million
NPV = $65 - $50 = $15 million
we know that
IRR is the rate at which the NPV will be zero
So, 6.5÷ r -50 = 0
r = 13%
Based on NPV, Option B should be selected as it contains higher NPV as compared to option A.
However, Based on IRR, Option A should be chosen as it contains higher IRR and a higher IRR represent a higher profit percentage
Answer:
This question is incomplete. However, I found the prompt to be as follows;
"What is the productivity measure of “units of output per dollar of input” averaged over the four-year period? "
Explanation:
To solve this question, find productivity;
Productivity in this case is total hamburgers produced divided by the total labor cost plus total equipment cost.
Productivity = # of hamburgers *52 weeks * 4 years / (total labor cost + equipment cost)
Productivity= 40,000(52)(4)/ {9,500(4) + 5000}
= 193.5 hamburgers/dollar of input
Therefore, the factory would produce about 194 burgers per dollar of input.
Her children will not inherit any of her assets
Answer: The correct answer is choice b.
Explanation: Location is very important for businesses. Of the options presented, the only one that is incorrect is choice b - Once management is committed to a specific location, many costs become easy to reduce. This choice is incorrect. Even though management is committed to a location, it does not mean that it is easy to reduce costs. Even though they are committed to a location, it may be impossible to reduce costs.
Answer:
$729
Explanation:
We can calculate the actual cost value by first multiplying the purchase value by the depreciation rate and after that deducting that amount from the replacement cost.
DATA
Replacement value = $1,200
Purchase value = $942
Depreciation rate = 3 years/6 years = 0.5
Solution
Acutal cost value = Replacement value - ( Purchase value x Depreciation rate)
Acutal cost value = $1200 - ($942 x 0.5)
Acutal cost value = $729
