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Ilia_Sergeevich [38]
3 years ago
5

Lucie is reviewing a project with an initial cost of $38,700 and cash inflows of $9,800, $16,400, and $21,700 for Years 1 to 3,

respectively. Should the project be accepted if it has been assigned a required return of 9.75 percent
Business
1 answer:
Alecsey [184]3 years ago
5 0

Answer:

Results are below.

Explanation:

To determine whether the project should be accepted or not, we need to calculate the net present value. <u>If the NPV is positive, the project should be accepted.</u>

<u>To calculate the NPV, we will use the following formula:</u>

NPV= -Io + ∑[Cf/(1+i)^n]

Cf1= 9,800/1.0975= 8,929.38

Cf2= 16,400/1.0975^2= 13,615.54

Cf3= 21,700/1.0975^3= 16,415.20

Total= $38,960.12

NPV= -38,700 + 38,960.12

NPV= 260.12

<u>The project is profitable. </u>

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At the end of the prior year, Doubtful Inc. had a deferred tax asset of $18,500,000 attributable to its only timing difference,
iren [92.7K]

Answer:

Journal entries to record Doubtful's income tax expense for the current year.

No   Account titles and Explanation             Debit'$    Credit'$

1       Income tax expense                             8,945,000

                  Deferred tax asset                                     3,800,000

                  [(42,000,000*35%) - 18,500,000]

                   Income taxes payable                               5,145,000

                   [(14,700,000*35%)]

         (To record tax expenses)

2        Income tax expense                            1,270,000

                 Valuation allowance - deferred tax asset  1,270,000

                   (3,730,000 - 5,000,000

          (To record valuation allowance)

7 0
3 years ago
If a payback period for a project is greater than its expected useful life, the project's return will always exceed the company'
Rudiy27

Answer:

entire initial investment will not be recovered.

Explanation:

Payback period is one of the methods used in capital budgeting.

Payback period calculates how long it takes for the amount invested in a project to be recovered from its cummulative cash flows.

For example, if a project costs $360 and the cash flow each year for its 6 years useful life is $120. The amount invested would be gotten back from the cummulative cash flow in 3 years.

But if a project costs $360 and the cash flow each year for its 2 years useful life is $120. The amount invested would never be gotten back the cummulative cash flow. Therefore, the entire investment amount will never be entirely recovered.

The project will always not be profitable

I hope my answer helps you.

3 0
3 years ago
ou have just purchased a four-month, $630,000 negotiable CD, which will pay a 4.5 percent annual interest rate. a. If the market
Serjik [45]

Answer:

Explanation:

first will need to calculate the Fv future value of this CD

Fv = Pv ( 1 + R )^n n = 4 /12 = 0.333333,  r, rate = 4.5/100 = 0.045

Fv = $ 630000 ( 1+ 0.045)^0.33333 = $ 639311.69

a) the current value at 5 % Pv = Fv / ( 1+r)ⁿ

Pv = $ 639311.69  / ( 1.05)^0.3333 = $ 628998.41

b) the current price at 4.25% = $ 639311.69  / ( 1.0425)^0.3333 = $ 630503.20

8 0
3 years ago
Levine Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product. Direct
FinnZ [79.3K]

Answer:

Total materials variance = (Actual quantity * Actual price) - (Standard quantity * Standard price)

= 2,850 - (230 * 14.4)

= 462 (Favourable)

Materials price variance = (Standard price - Actual price) * Actual quantity

= [1.8 - (2,850/1,500)] * 1,500

= 150 Unfavourable

Materials quantity variance = (Standard quantity - Actual quantity) * Standard price

= [(230 * 8) - 1,500] * 1.8

= 612 Favourable

Total labour variance = (Actual hours * Actual rate) - (Standard hours * Standard rate)

= 19,458 - (230 * 84)

= 138 Unfavourable

Labour price variance = (Standard rate - Actual rate) *  Actual hours

= [14 - (19,458/1,410)] * 1,410

= 282 Favourable

Labour quantity variance = (Standard hours - Actual hours) * Standard rate

= [(230 * 6) - 1,410] * 14

= 420 Unfavourable

6 0
3 years ago
What is the effect on real GDP of a ​$150 billion change in planned investment if the MPC is ​0.65? ​$ nothing billion. ​(Enter
ExtremeBDS [4]

Answer and Explanation:

The computation of the effect on real GDP is shown below:

change in GDP is

= Multiplier × change in investment

= 1 ÷ (1 - MPC) × change in investment

= 1 ÷ (1 - 0.65) × $150 billion

= 2  × $150 billion

= $300 billion

And, the marginal propensity to consume is

= Change in spending of consumer ÷ income change

= (2,100 - 1,200) ÷ (4,000 - 3,000)

= 900 ÷ 1,000

= 0.9

6 0
2 years ago
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