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Butoxors [25]
3 years ago
15

A firm with a WACC of 10% is considering the following mutually exclusive projects:

Business
1 answer:
8090 [49]3 years ago
8 0

Answer:

Option e is the correct answer.

As the NPV of project 1 is higher than Project 2's NPV, Project 1 is recommended,

Explanation:

To determine which project to choose, we will calculate the net present value (NPV) of both projects and the project with the higher NPV will be chosen.

NPV is the present value of the future cash flows inflows expected from the project less any initial cost. The formula for NPV is as follows,

NPV = CF1 / (1+WACC)  +  CF2 / (1+WACC)^2  +  ... +  CFn / (1+WACC)^n  -  Initial outlay

Where,

  • CF1, CF2,... is the cash flow in year 1, Year 2 and so on

NPV - Project 1 = 60 / (1+0.1)  +  60 / (1+0.1)^2  +  60 / (1+0.1)^3  +  

220 / (1+0.1)^4   +  220 / (1+0.1)^5  -  200

NPV - Project 1 = $236.076 rounded off to $236.08

NPV - Project 22 = 300 / (1+0.1)  +  300 / (1+0.1)^2  +  100 / (1+0.1)^3  +  

100 / (1+0.1)^4   +  100 / (1+0.1)^5  -  600

NPV - Project 2 = $126.1861 rounded off to $126.19

As the NPV of project 1 is higher than Project 2's NPV, Project 1 is recommended,

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Answer:

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Balance per bank statement $2,979.94

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Which Law, Public Safety, and Security worker is most likely employed by a private business?
barxatty [35]

Answer:

a Security Guard at the Mall of America in Minnesota

Explanation:

Since the Mall of America <u>is not a state-owned business</u> (it is managed by the Triple Five Group, a private company), a security guard working for the Mall of America is employed by a private business.

The FBI, the state of Massachusetts and the US Supreme Court are all <em>government entities</em> (public sector), so their employees are not employed by a private business.

8 0
3 years ago
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3 0
3 years ago
uppose that a competitive​ firm's marginal cost of producing output q​ (MC) is given by MC (q )equals6plus2q. Assume that the ma
natita [175]

Answer:

a) The firm will produce 4.50 units of output

b) Producer surplus is $20.25

c) In short run run, the profit would be positive.

Explanation:

Suppose that a competitive​ firm's marginal cost of producing output q​ (MC) is given by MC(q) = 6 + 2q. Assume that the market price​ (P) of the​ firm's product is ​$15.

a) What level of output​ (q) will the firm​ produce?

b) What is the​ firm's producer​ surplus?

c)  Suppose that the average variable cost of the firm​ (AVC) is given by AVC (q ) = 6 + 1q. Suppose that the​ firm's fixed costs​ (FC) are known to be ​$20. Will the firm be earning a​ positive, negative, or zero profit in the short​ run.

a) What level of output​ (q) will the firm​ produce?

Given that MC(q) = 6 + 2q; to maximize profit, the marginal cost should be equal to the market price.

∴ 6 + 2q = $15

2q = 15 - 6

2q = 9

q = 9/2

q = 4.50 units

The firm will produce 4.50 units of output

b) What is the​ firm's producer​ surplus?

Producer surplus is the area below the market price of $15 and above the marginal cost curve of 6 + 2q which is linear. This gives a triangle with base of 4.50 (since q = 4.50) and height of $15 - $6 = $9

Producer surplus = area of triangle = 1/2 × base × height = 1/2 × 4.5 × 9 = 20.25

Producer surplus is $20.25

c)  Suppose that the average variable cost of the firm​ (AVC) is given by AVC (q ) = 6 + 1q. Suppose that the​ firm's fixed costs​ (FC) are known to be ​$20. Will the firm be earning a​ positive, negative, or zero profit in the short​ run.

Profit = total revenue - total cost

total cost = total variable cost + total fixed cost

Total variable cost = q × AVC(q) = 4.5 × (6 + 4.5) = 4.5 × 10.5 = $47.25

total cost = total variable cost + total fixed cost = $47.25 + $20 = $67.25

Total revenue  = Price × quantity = $15 × 4.5 = $67.5

Profit = total revenue - total cost = $67.5 - $67.25 = $0.25

In short run run, the profit would be positive.

6 0
3 years ago
Read 2 more answers
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