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Tanya [424]
3 years ago
8

You are considering two projects. Project A has projected cash flows of $6,500, $4,500, and $2,500 for the next three years, res

pectively. Project B has projected cash flows of $2,500, $4,500, and $6,500 for the next three years, respectively. Assuming both projects have the same initial cost, you know that:
Business
1 answer:
Zinaida [17]3 years ago
7 0

Answer:

Project A is more valuable than Project B given a positive discount rate.

Explanation:

Let us assume the Discount Rate be r and cash flow for year n be CFn

Also

Let us assume initial Investment be X

So,  

NPV = ΣCFn ÷ (1+r)^n

NPVA = - X + 6500 ÷ (1 + r) + 4500 ÷ (1+r)^2 + 2500 ÷ (1+r)^3

NPVB = - X + 2500 ÷ (1+r) + 4500 ÷ (1+r)^2 + 6500 ÷ (1+r)^3  

NPVA - NPVB = - X + 6500 ÷ (1+r) + 4500 ÷ (1+r)^2 + 2500 ÷ (1+r)^3 - (- X + 2500 ÷ (1+r) + 4500 ÷ (1+r)^2 + 6500 ÷ (1+r)^3)

= 4000 ÷ (1+r) - 4000 ÷ (1+r)^3 = 4000(1 ÷ (1+r) - 1 ÷ (1+r)^3)

In the case when

Ir > 0, 1 ÷ (1+r) > 1 ÷ (1+r)^3

So,  

NPVA - NPVB > 0 => NPVA > NPVB

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Building Supplies is considering a merger with Tools and More. Building's total operating costs of producing services are $4 mil
Natalka [10]

Answer:

We generally calculate total average cost by dividing total cost / total output units.

In this case, we are not given the output units, but instead we are given the output value, so we should find a percentage from total revenue.

total costs = $4,800,000

total revenue = $20,000,000 + $5,000,000 = $25,000,000

average total cost = ($4,800,000 / $25,000,000) x 100 = 19.2%

This means that for every $100 of revenue, the merged company will spend $19.20.

7 0
3 years ago
Euphrasia, a mixed open​ economy, was severely affected by a recession that almost paralyzed its service sector. The Euphrasian
Flura [38]

Answer:

E) Oil imports declined as countries exporting oil reduced supply.

Explanation:

Oil is extremely important for industrialized nations and since Euphrasia is a mixed open economy, we can assume that it is an industrialized nation. Oil has become the most important energy source for more than 60 years and is the raw material for manufacturing plastic.

During the 1970s and early 1980s the American economy was shattered by an increase in the price of foreign oil and a decrease in its domestic production levels. The importance of oil is also why so many modern wars have been fought over oil production and reserves.

4 0
3 years ago
Gathering information with your eyes is called
Zina [86]
This is called, visual perception.
3 0
3 years ago
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Tangerine Tangerine ink Target capital structure is 20% debtthe following information about sleep please Corporation a company h
Tasya [4]

16% is the answer.

<u>Explanation:</u>

<u>The following is used in order to calculate the cost of the retained earnings. </u>

The Calculation of cost of retained earnings by using bond yield plus the risk premium method

= Long term bond yield + the risk premium

The Long term bond yield = 12 percent

The risk premium = 4 percent

Cost of retained earnings = 12 percent plus 4 percent = 16 %

Therefore, the correct option will be with the 16 percent .

7 0
3 years ago
Select all that apply.
tino4ka555 [31]

Answer:

adding up consumption, investment, government expenses, and net exports

adding up the market prices of final goods and services produced in the U.S

adding up the incomes of producers and taxes paid to the government

Explanation:

GDP is a measure of the sum value of a country's output in a given period. The GDP value reflects economic growth or decline in a country for the period under review.

GDP is calculated using three methods. They include the income, production, and expenditure approach.

In the Income approach, economists add up all the earnings from the factors of production. Wages and salaries of all employees; the profits from businesses and corporates' ; rents, and interests form landlords are summed up to get GDP. Adjustments are made to cater for the taxes paid to the relevant government agencies. ( 4th option)

The production approach involves getting the value of all the finished consumer goods and services in the economy. The approach excludes intermediary goods and work-n progress. GDP is obtained by adding the total of the finished products and services and multiplying them by their prices. (3rd option)

The consumption option applies a formula that GDP = C+G+I+ NX, where C is private consumption expenditure,  G is government consumption and investment expenditure, and I in private investment expenditure. NX is the net imports. ( 1 st option )

4 0
3 years ago
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