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Question 4

SashulF [63]

1. The calculated capital budgeting techniques yielded the following results:

A. Accounting Rate of Return (AROR) is <u>28%</u>.

B. Payback Period Technique (PBP) is <u>5 years</u>.

C. Net Present Value Technique (NPV) is <u>RM33,588</u>.

D. Profitability Index (PI) is <u>1.056</u>.

2. The project should be accepted based on the positive results above.

3. The importance of capital budgeting techniques lies in the fact that they aid capital decision-making by measuring their probable outcomes.

<h3>What are capital budgeting techniques?</h3>

Capital budgeting techniques are capital investment evaluation tools.

Some of the capital budget tools include the Payback Period, Discounted Payment Period, Net Present Value, Proﬁtability Index, Internal Rate of Return, and Modiﬁed Internal Rate of Return.

These capital budgeting techniques help management to evaluate capital projects and to choose investment strategies.

<h3>Data and Calculations:</h3>

Investment cost = RM600,000

Cost of capital = 12%

Net Cash Flows PV Factor Present Value

Year 0 RM600,000 1 (RM600,000)

Year 1 RM100,000 0.893 89,300

Year 2 110,000 0.797 87,670

Year 3 121,000 0.712 86,152

Year 4 133,100 0.636 84,652

Year 5 146,410 0.567 83,014

Year 6 RM400,000 0.507 202,800

Present value of cash flows = RM633,588

Net Present Value RM33,588

Total Net Cash Flows = RM1,010,510

Average Net Cash flows = RM168,418 (RM1,010,510/6)

Accounting Rate of Return = Average Income/Initial Cost

= 28% (RM168,418/RM600,000 x 100)

Payback period = 5 years

NPV = Initial Investment - PV of net cash flows

= RM33,588

Profitability Index = Present value of cash flows/Initial Cost

= 1.056 (RM633,588/RM600,000)

Learn more about capital budgeting techniques at brainly.com/question/17159659

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8 0

2 years ago

If the Federal Reserve increases the reserve requirement, what effect will this have on the nation’s money supply? a. Increase t

dem82 [27]

The correct answer is c)

3 0

3 years ago

In a merger or acquisition, an asset should be acquired if it: is a firm in the same line of business in which the acquirer has

Scorpion4ik [409]

It generates a positive net present value to the shareholders of an acquiring firm.

<h3>Why Do Companies Merge With or Acquire Other Companies?</h3>

Mergers and acquisitions (M&As) are the acts of combining two or more companies or assets in order to stimulate growth, gain a competitive advantage, increase market share, or influence supply chains.

KEY LESSONS

Mergers and acquisitions (M&As) are the acts of combining two or more companies or assets in order to stimulate growth, gain a competitive advantage, increase market share, or influence supply chains.

A merger is the joining of two companies in which one of the companies ceases to exist after being absorbed by the other.

A merger occurs when one company acquires a majority stake in the target company, which keeps its name and legal structure.

To learn more about merger and acquisition from the given link

brainly.com/question/14195407

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4 0

2 years ago

question 9 imagine that a design firm’s research team knows about their users’ pain points, but they need to answer a few specif

alukav5142 [94]

Since the research team need to answer a few specific questions before proceeding, the most appropriate research method would be an interview.

<h3>What is a research?</h3>

A research is also referred to a study and it can be defined as an investigation which typically involves the process of gathering (collecting) necessary information about a particular thing of interest, in order to reach a logical conclusion with results.

<h3>What is a research method?</h3>

In Science, a research method can be defined as the ways or techniques that are adopted by a researcher for the collection and analysis of data.

<h3>The types of research method.</h3>

Basically, there are different types of research method used for the collection of data and these include the following:

Observation
Secondary data analysis.
Surveys.
Focus groups.
Mixed methods
Experiments.
Interviews.

In conclusion, the most appropriate research method would be an interview because the research team need to answer a few specific questions before proceeding.

Learn more about research here: brainly.com/question/10129052

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4 0

2 years ago

Question 9

STALIN [3.7K]

Answer:

Economic recession

Explanation:

A recession occurs when an economy faces a negative real GDP for two successive quarters or more. In a business cycle, the recession would be a period that occurs between the peak and the trough.

A recession can be caused by many factors:

1. High interest rates

2. High unemployment

3. Low consumer and business confidence

It is possible to say that all factors are interconnected. For example, when interest rates are higher, it means that people will spend less on borrowed money, as now borrowing money is more costly. This in turn means that demand for products are lower, leading to lower business confidence. When sales are low, businesses may attempt to cut back on costs to ensure profits. This can take the form of laying off workers. Hence, unemployment in the economy will increase. Consumer confidence will also plummet.

Some consequences may include:

1. Fall in inflation: As aggregate demand in the economy falls, price levels will fall. Thus, reducing inflation.

2. Government deficit: the government may have to start spending more on expenditures such as unemployment benefits. On the other hand, income generated from corporate/income taxes will fall. Fall in income and rise in expenditure causes a deficit.

3. Environmental pollution is less: Due to less movement in the economy, polluting factors such as factory smoke, vehicle congestion and waste send to landfill will be much lesser. This would prove to be beneficial for the environment.

7 0

3 years ago