Answer:
C. Consumers want more video game systems then the company can make.
Answer:
A
Explanation:
Because as per time the value of money the future cash holds are discounted at discount rate yo find the present Worth, thus the higher value of early present cash flows creates higher present value compared to lower value of early cash flows
Answer:
purchase the machine because the expected rate of return exceeds the interest rate.
Explanation:
Given the cost of machine = $2000
If the firm borrows fund at an interest rate of 10% to buy the machine,
Interest paid on the cost of machine = 10% of $200
= 10/100 × $2000
= $200
Total amount that must be paid back for the machine by the firm = actual cost of machine + interest rate
= $2000 + $200
= $2,200
Since the additional revenue generated from the machine after all operating cost = $2,300
Profit accrued by the firm = Revenue - (actual cost of machine + interest)
Profit accrued by the firm = $2,300-$2200
Profit accrued by the firm on the machine = $100
Based on the profit margin, it can be concluded that the firm can purchase the machine because the expected rate of return exceeds the interest rate.
Note that the expected rate of return is $300 (i.e $2300 - $2000) and the interest rate of is $200 (i.e 10% of $2000)
Answer:
A
Explanation:
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Cash flow each year from year 1 to 6 = $75,200
I = 6%
PV = $369,780.96.
To find the PV 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
