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azamat
2 years ago
8

You work at a construction company with a stated cost of capital of 12%. Your company is currently deciding between two differen

t projects. Project A will pay you $800,000 up front and $1.5 million after 4 years. You will have to spend $300,000 now, and $400,000 once a year for the next 4 years. Project B will pay you $1.2 million up front and cost you $1.1 million in 4 years.
A. What is the net present value of Project A?
B. What is the net present value of Project B?
Business
1 answer:
anygoal [31]2 years ago
7 0

Answer:

$1,453,277.12

$1,899.069.89

Explanation:

Net present value is the present value of after-tax cash flows from an investment less the amount invested.  

NPV can be calculated using a financial calculator  

Project A

Cash flow in year 0 = $800,000 - $500,000 = $300,000

Cash flow in year 1 = 0

Cash flow in year 2 =0

Cash flow in year 3 =0

Cash flow in year 4 = 1.5 million

NPV =

Poject B

Cash flow in year 0 = $1.2 MILLION

Cash flow in year 2 =0

Cash flow in year 3 =0

Cash flow in year 4 = -1.1 MILLION

NPV =

Present value is the sum of discounted cash flows

Present value can be calculated using a financial calculator

To find the NPV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.  

3. Press compute  

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The market demand for wheat is Q = 100 − 2p + 1pb + 2Y . If the price of wheat, p, is $2, and the price of barley, pb, is $3, an
stira [4]

Answer:

0.95

Explanation:

Given that,

Market demand for wheat: Q = 100 − 2p + 1pb + 2Y

price of wheat, p = $2

price of barley, pb = $3

Income, Y = $1000

Q = 100 − 2p + 1pb + 2Y

   = 100 - (2 × 2) + (1 × 3) + (2 × 1,000)

   = 100 - 4 + 3 + 2,000

   = 2,099

Differentiating Q with respect to Y,

dQ/dY = 2

Income elasticity of wheat:

= (dQ/dY) × (Y ÷ Q)

= 2 × (1,000 ÷ 2,099)

= 0.95

4 0
3 years ago
Jackson Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2021, with payment of 20 million Korean won
Stolb23 [73]

Answer:

The correct option is (b)

Explanation:

According to the scenario, the foreign currency that original sold at the market is shown below:

= (Forward rate to Jan 15 - Spot rate) × paymen made

= ($0.00089 - $0.00082 ) × 20 million

= $0.00007 × 20,000,000

= $1,400 premium

hence, the foreign currency that originally sold at the market is $1,400 premium

Therefore the correct option is (b)

5 0
2 years ago
Sharon and Amy are roommates. They spend most of their time studying (of course), but they leave some time for their favorite ac
Ratling [72]

Answer:

Explanation:

:

Sharon and Amy are roommates. They spend most of their time studying (of course), but they leave some time for their favorite activities: making pizza and brewing root beer. Sharon takes 4 hours to brew a gallon of root beer and 2 hours to make a pizza. Amy takes 6 hours to brew a gallon of root beer and 4 hours to make a pizza.  

a. What is each roommate’s opportunity cost of making a pizza?

Each room mates opportunity cost of making pizza is the beer they would have made with the time spent on making pizza which is

Sharon = 2/4 gallon of beer or 0.5 gallon of beer

Amy = 4/6 gallon of beer or 0.67 gallon of beer

Who has the absolute advantage in making pizza?  

Sharon arguably has absolute advantage because she has comparative advantage in producing both items because she spends less time producing both however she spends half the time of Amy in producing Pizza in particular

Who has the comparative advantage in making pizza?  

Sharon because she spends half the time of Amy in producing Pizza  

b. If Sharon and Amy trade foods with each other, who will trade away pizza in exchange for root beer? Amy will trade pizza for root beer because she has a greater disadvantage in Pizza production in relation to root beer when compared to Sharon. She spends double the time of Sharon in making Pizza but less than double the time of Sharon in making root beer

c. The price of pizza can be expressed in terms of gallons of root beer.  

Sharon = 2 hours/4 hours gallon of beer or 0.5 gallon of beer per pizza

Amy = 4 hours/6 hours gallon of beer or 0.67 gallon of beer per pizza

What is the highest price at which pizza can be traded that would make both roommates better off?  

That price should be lower than Amy's cost but higher than Sharon's cost, so they can both make profits. = (0.5+0.67)/2 = 0.585 gallon of root beer

What is the lowest price? Explain.

The lowest price will be the opportunity cost of Sharon which is 0.5 gallon of root beer because if the price is lower it becomes a loss to Sharon

3 0
3 years ago
Mary buys a lottery ticket and promises to buy her friend Sharon a new pair of shoes if she checks the lottery results while Mar
Oduvanchick [21]

Answer:

C. Neither Mary nor Sharon can claim breach of contract.

Explanation:

Mary buys a lottery ticket and promises to buy her friend Sharon a new pair of shoes if she checks the lottery results while Mary is away.

Sharon agrees to do so, provided she has the time for it.

If Sharon fails to check the results and Mary wins the lottery,  then it would be true of the contract between Mary and Sharon that Neither Mary nor Sharon can claim breach of contract.

The reason is Mary's promise is based on the condition that Sharon checks the result, Sharon's promise is based on the condition that 'if she has the time for it.'

The condition was not met by Sharon hence she cannot claim a breach of contract because she did not check the results, similarly, Mary cannot sue Sharon because sharon made it clear that she will only check If she has the time.

4 0
3 years ago
First,label the following scenarios as to whether they would create a producer or consumer surplus. Then, after you have labeled
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Alice is willing to spend $30 on a pair of jeans, and has a coupon for $10 off she found online. She selects and purchases a $35 pair of jeans, pre-discount. 
(Alice's consumer surplus, $5)

<span>Jeff finds some steaks for $16 for which he would have been willing to pay $20. The butcher notices the meat is near the expiration date and gives him an extra 75% off. </span>
(Jeff's consumer surplus, $16)

<span>Nicole has in her possession a hockey puck from the 2010 Winter Olympic Games and sells it on eBay. She will only sell the puck if the winning bid is greater than or equal to $500. After bidding closes, the last bid stands at $500. </span>
(Nicole's producer surplus, $0)

<span>Claire is trying to sell her used calculus textbook online. She asks for $150 or best offer and is willing to sell for anything over $100. She is able to sell it for $125. </span>
(Claire's producer surplus, $25)


<span>Roy is willing to pay $2.50 for a sports drink. He notices the price is $2.79 and chooses not to purchase a sports drink. (Roy's consumer surplus, $0)</span>
8 0
3 years ago
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