rons woodworking supplies high quality wooden bowls made from xotic hardwoods form around the world for its customers Ron has hi
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Answer:
See the attached and the explanation below.
Explanation:
a. A production possibility curve (PPC) refers to a curve that displays different combinations of the maximum output of two goods that can be produced from a given or fixed amount of input and technology.
An example of PPC is figure (A) in the attached document.
b. When there is a major technical breakthrough in the capital goods industry and the new technology is widely adopted only in this industry, it will make the PPC to rotate outward at the capital good axis only, while consumer good axis will remain the same (see the curve and the arrow in Figure B in the attached). This implies that the break has enabled the economy to produce more of capital goods while consumer goods production level remains the same.
c. When there is a technological advance in consumer goods production, but not in capital goods production, it will make PPC to rotate outward at the consumer good axis only, while capital good axis will remain the same (see the curve and the arrow in Figure C in the attached). This implies that the break has enabled the economy to produce more of consumer good while capital good production level remains the same.
Answer:
MIRR = 16.6%
Explanation:
We have the formula to calculate the MIRR of the project:
+)
In which:
- FV - terminal value, the future value of net cash inflow which is assumed to be re-invested at the rate of cost of capital = WACC = 12.25%
- PV - the present value of the net cash outflows during the investment at the rate of cost of capital = WACC
- n: numbers of years (n=4)
The future value of net cash inflow Year i = Cash inflow × (1 + Cost of capital)^(number of years reinvested)
= Cash inflow × 1.1225^(n - i)
+) = $424.327
+) = $403.202
+) = $381.65
+) = $360
<em>=> Terminal Value = 424.327 + 403.202 + 381.65 + 360 = $1569.179</em>
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Present Value Year i =
The project requires the initial investment = - $850 and there are no cash outflows during 4 years of the project
<em>=> PV of the project = PV Year 0 = </em><em> = 850</em>
=> MIRR = = 0.166 = 16.6%