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Rus_ich [418]
3 years ago
11

Boulderado has come up with a new composite snowboard. Development will take Boulderado four years and cost $250,000 per year, w

ith the first of the four equal investments payable today upon acceptance of the project. Once in production the snowboard is expected to produce annual cash flows of $200,000 each year for 10 years. Boulderado's discount rate is 10%. Calculate the IRR for the snowboard project and use it to determine the maximum deviation allowable in the cost of capital estimate that leaves the investment decision unchanged.
Business
1 answer:
ehidna [41]3 years ago
3 0

Answer:

a) 13.704%

b) 3.704%

Explanation:

Development of composite snowboard = 4 years

Total cost / investment = 250,000 * 4 = $1,000,000

Annual cash flows ; $200,000  for 10 years

discount rate = 10%

cash flow at t = 0 =  ( Total cost / investment ) = - $1,000,000

<u>a) calculate the IRR for the snow board </u>

attached below is the calculation using online tool

IRR = 13.704%

<u>b) maximum deviation allowable in cost of capital</u>

maxi deviation = IRR - r

                         = 13.704% - 10% = 3.704%

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Answer:

1. Budget.

2. Financial goals.

3. Competition.

4. Marketing message.

5. Other marketing goals.

6. Brand image goals.

7. Product description.

8. Pricing.

9. Marketing research.

10. Promotional strategies.

Explanation:

1. <u>Budget</u>: The amount you plan to spend on each promotional strategy.

2. <u>Financial goals</u>: The number of sales you plan to have in the next year.

3. <u>Competition</u>: Strengths and weaknesses of other companies that provide similar products.

4. <u>Marketing message</u>: The message about your product's benefits that you plan to convey to your target market.

5. <u>Other marketing goals</u>: The percentage of customers who say they are highly satisfied in your customer profile survey.

6. <u>Brand image goals</u>: The qualities you want to have people associate with your product.

7. <u>Product description</u>: A list of the product's features.

8. <u>Pricing</u>: How the cost of your product will support your brand image and marketing message.

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10. <u>Promotional strategies</u>: Ways you will communicate with your target market.

4 0
3 years ago
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The result of the accounting process is several financial statements. The income statement, the balance sheet, and the statement
Volgvan

Answer: Please refer to Explanation

Explanation:

<u>Income Statement </u>

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Unprofitable Company - <em>Bottom line in Deficit</em>

The Bottomline in the Income statement refers to the Net Profit after all adjustments and deductions have been made. This is the figure that is taken to Retained Earnings and therefore funds the business. If the Bottomline is in Deficit that means the company made a loss and by definition are Unprofitable. The reverse is true.

<u>Balance Sheet</u>

Profitable Company - <em>Financially healthy</em>.

Unprofitable Company - <em>Financially failing</em>.

The Balance Sheet shows the health of a company by checking it's assets vs it's Liabilities and Equity. If it is shown for instance that there is too much debt in the company or that Current Liabilities are more than Current Assets, this shows that the company is not healthy and this is usually a symptom of an Unprofitable company. However a balance sheet showing strong Net Assets and a good Debt - Equity balance is considered healthy and is related to a Profitable Company.

<u>Statement of Cashflow.</u>

Profitable Company - <em>Inward flow of cash</em>

Unprofitable Company - <em>Outward flow of Cash</em>

The Statement of Cashflow (SCF) shows the actual amount of cash that a company has and spends. Other statements can include amounts for which cash has not been paid yet due to the Accrual system in Accounting. The SCF only deals with cash. A Profitable Company will have more cash coming in than going out because it would mean they are making profits as well as being in a strong financial position.

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3 0
3 years ago
On January 1 of the current year, Anna and Jason form an equal partnership. Anna contributes $50,000 cash and a parcel of land (
VLD [36.1K]

Answer:

Option (C) is correct.

Explanation:

Given that,

Anna contributes = $50,000 of cash

Parcel of land:

Adjusted basis = $100,000

Fair market value = $150,000

The contributions are free from taxes and carryover basis is applicable; thus 100,000 basis in the land plus 50,000 cash basis.

Therefore,

Anna's tax basis for her partnership interest :

= Adjusted basis + Cash contribution

= $100,000 + $50,000

= $150,000

Hence, Anna has a $150,000 tax basis for her partnership interest.

6 0
3 years ago
The diagnostic process is _____. a systematic approach to understand the organization none of the answers performed exclusively
Nutka1998 [239]

Answer:

A. a systematic approach to understand the organization

Explanation:

Business diagnosis can be defined as a strategic technique which typically involves the process of defining, identifying and classifying the various business processes, logistics, product quality in order to have an indepth understanding and knowledge about an organization.

The diagnostic process is a systematic approach to understand the organization because it involves critically studying all its aspects and areas.

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2 years ago
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Answer:

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Explanation:

The computation of the rate of return is shown below:

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The following formula should be applied

= RATE(NPER;PMT;-PV;FV;TYPE)

The present value comes in negative

After applying the above formula, the rate of return is 6.06%

7 0
3 years ago
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