1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
erik [133]
2 years ago
5

Ginny is considering an investment costing $55,000 that has cash flows of $35,000 in Year 2, $36,000 in Year 3, and −$5,000 in Y

ear 4. Ginny requires a rate of return of 8 percent and has a required payback period of three years. Based on the payback method should she make this investment? All things considered, do you agree with this decision? Why or why not?
Business
1 answer:
denis-greek [22]2 years ago
7 0

Answer:

Cumulative cash flows in year 0 = -$55,000

Cumulative cash flows in year 1 = -$55,000

Cumulative cash flows in year 2 = -$55,000 + $35,000 = -$20,000

Cumulative cash flows in year 3 = -$55,000 + 35,000 + $36,000 = $16,000

So, Payback period of three years =2+20000/36000 = 2.5555556 years

Now, as the payback period is less than three years, we should make the investment

However, I do not agree with the decision as payback method does not consider time value of money and ignores all cash flows beyond payback period and hence in this case it is ignoring cash flows in year 4 which is an outflow

NPV=-55000+0/1.08^1+35000/1.08^2+36000/1.08^3-5000/1.08^4=-90.3298767  As NPV is negative, let do not make the investment.

You might be interested in
If a firm sells a prestige product, what kind of relationship between price and quantity demanded should it expect?.
solmaris [256]

For a firm that sells a prestige product, the relationship between price and quantity demanded is a <u>positive direct relationship</u>.

<h3>Why is the relationship between demand and price of prestige products direct?</h3>

The relationship between the demand and price of prestige products is direct because prestige products tend to sell better at high prices than at low prices.

And when the quantity demanded increases, the price tends to increase.

An example of a prestige product is an old car.

Thus, for a firm that sells a prestige product, the relationship between price and quantity demanded is a <u>positive direct relationship</u>.

Learn more about the demand for prestige products at brainly.com/question/6374886

3 0
2 years ago
Even though the nation faces political instability, the island of Pantay with its wide, expansive beaches is a destination hub f
galina1969 [7]

Answer: Foreign Direct Investment

Explanation:

Foreign Direct Investment is a type of investment into a country where the foreign investor establishes a presence by actually running and operating a company in the domestic country.

This is what the large theme park wants to do in Pantay. By making a commitment and hiring hundreds of locals, the company is intent on running a company on the island so this is Foreign Direct Investment.

7 0
2 years ago
The Jay Group hires better employees than its competition by conducting effective searches and multi-tiered interviews. The comp
GalinKa [24]

Answer:

The answer is: People differentiation

Explanation:

Jay Group can gain a competitive advantage by hiring and training better and more efficient employees than their competition. The more efficient an employee is, the more productive the company will be.

The best examples are sports teams, titles are won by a great quarterback and a rock solid defense.

5 0
2 years ago
On November 1, Vacation Destinations borrows $1.57 million and issues a six-month, 9% note payable. Interest is payable at matur
Keith_Richards [23]

Answer:

(a) To Record the issuance of the note

Debit Cash $1.57 million

Credit Notes payable $1.57 million

<em>(To record notes payable issuance)</em>

(b) Adjusting entry for interest expense at December 31:

Debit Interest expense $23,550

Credit Interest payable $23,550

<em>(To record interest expense on notes payable as at Dec 31)</em>

Explanation:

Note payable is a promissory note with a written promise made by the borrower to the lender (payee) to pay a certain, definite sum at a specified date.

Interest expense on the notes is calculated as: Principal x Interest Rate x Time

In this case, the total interest expense is $1.57 million x 9%/12 x 6 months = $70,650.

Total interest expense to the Company as at December 31 is therefore $70,650 / 6 months x 2 months = $23,550.

3 0
3 years ago
Brainliest help mee please get this correct
denis23 [38]

Answer:

it should  be c

Explanation:

8 0
3 years ago
Other questions:
  • What key stage involves defining your project? a. Representing your data in a trustworthy manner b. Working with data c. Develop
    15·1 answer
  • Which of the following is a reason a coffee shop might exit from the market? Select all that apply.
    6·1 answer
  • The country of Dalima has long been a substantial exporter of agricultural goods, reflecting its unusual abundance of arable lan
    5·1 answer
  • Sarah owns Fine Cuts hair salon. Hairdressers each rent a chair in the salon where they can style customers' hair, and Sarah pro
    14·1 answer
  • Marble Construction estimates that its WACC is 10 percent ifequity comes from retained earnings. However, if the company issuesn
    9·1 answer
  • Betty, an accountant, agreed to prepare Tim's income tax returns by April 15th, when they were due. Tim then discovered he neede
    14·1 answer
  • Country A and Country B have had an informal trading arrangement for many years wherein merchants on the border of the countries
    10·1 answer
  • (True) or (False)? The most common method companies use is double-declining balance, because it allows companies to recognize fo
    7·1 answer
  • for brainliest and 100 points !!!!the unemployment rate is 5%. there are 139179 people working in the country. calculate the lab
    6·2 answers
  • When Professor Park travels for business, she always rents her car through Station Rental Company because no matter the office l
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!