Brad's Diner is expanding and expects operating cash flows of $32,000 a year for 4 years as a result. This expansion requires $3
1 answer:
Answer: $57,101.73
Explanation:
First find the present value of the cash inflows. The $32,000 is a constant payment so is an annuity. The net working capital will be realized at the end of the project as well.
Present value of cash inflows = (32,000 * Present value interest factor of an annuity, 4 years, 12%) + 3,000/ (1 + 12%)⁴
= (32,000 * 3.0373) + 1,906.55
= $99,101.73
NPV = Present value of inflows - Outflows
= 99,100.15 - (39,000 + 3,000)
= $57,101.73
You might be interested in
Answer: B. In the short run, the typical firm increases its output and makes an above normal profit.
Explanation:
I have attached a graph to explain.
Originally the Perfectly Competitive Market is in a long run Equilibrium.
This means that at 5000 units the $20 selling price was as a result of Marginal Revenue being equal to Marginal Cost.
Now a sudden change in Demand has taken the price up which then forces the Marginal Revenue Curve upwards.
This will culminate with the Marginal Revenue Curve now intersecting the Marginal Cost curve at a higher point being point F so that profit can be maximised.
This higher level will thus lead to a higher output than 5000 units at point Q as the firm will increase output.
Notice that at that point the Marginal Revenue is higher than Average Total Cost meaning that an Above normal profit is being made.
Do react or comment if you need any clarification.
Answer:
0.536
Explanation:
The computation of the correlation coefficient is shown below:-
Therefore for computing the correlation coefficient between the returns on A and B we simply applied the above formula.
So, according to the question the option is not available. The right answer is 0.536 and the same is not considered