Answer:
1.a. $2,460,000
2.c. $350,000
Explanation:
Calculation of after-tax salvage value
Cost of machine$ 5,000,000
Depreciation (20%+32%)=52% $ 2,600,000
WDV $ 2,400,000
($5,000,000-$2,600,000)
Sale price $ 2,500,000
Profit/(Loss) $ 100,000
Tax-40% $ 40,000
Sale price after-tax $ 2,460,000
Therefore the After-Tax Salvage Value of the production equipment at the end of the 2nd year equals$2,460,000
2.
The net working capital invested in the business, in the beginning will gets recovered at the end of the project.
Year 2, initial working capital of $ 350,000 will therefore be recovered and change in net working capital will be a positive 350,000
Therefore the change in Net Working Capital at the end of the 2nd year equals $350,000
Answer:
TIE = 4,985.71
Explanation:
net income / (1 - tax-rate) = Earnings before taxes
3,000 / 0.7 = 4,285.71
Earnigns before taxes + interest = EBIT (earnings before interest and taxes)
4,285.71 + 700 = 4,985.71
When the opportunity cost associated with increasing the production of one good or service in terms of another is constant at every level of production, then the production possibility frontier is <u>rightward</u>.
<h3>What is production possibility frontier?</h3>
A model used to illustrate the trade-offs related to splitting resources between the production of two items is called the Production Possibilities Curve (PPC). The PPC is a useful tool for demonstrating the ideas of scarcity, opportunity cost, efficiency, and economic development and contraction.
The value or advantage forfeited by engaging in a specific activity in comparison to engaging in a different activity is known as the opportunity cost in microeconomic theory. Simply put, it means that if you choose one activity, you forfeit the chance to do another.
We can produce more as the economy expands and all other factors remain the same, hence this will cause a movement in the production possibilities curve to the right, or outward.
Learn more about opportunity cost on:
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Answer: Commercialization
Explanation:
The commercialization stage is the process in which the various types of new products and the services are developed in the market.
In the commercialization stage the new products are get launched and also promoted for increase the demand of the new products and services in the market.
The main key function of the commercialization stage is that achieve the various types of commercial success and also the customer support of the new products. It is mainly the process introduce the new products in the market.
Answer:
a.
Excess return for Zynga today will be -3.38%
b.
Excess return on P&G today will be -1.04%
Explanation:
The excess return is the return earned above/beyond the benchmark return. This benchmark can be set at either the risk free rate or any other stock or portfolio's return.
The return on a stock is usually calculated using the CAPM equation. The CAPM considers risk free rate, the return on market and the stock's beta to calculate the expected return on a stock.
The market always has a beta of 1. Beta is the measure of the volatility of stock returns. If the excess return on the market falls or rises, the effect of this on a stock's excess return will be based on its beta.
a.
The excess return of Zynga today will be = -2.6% * 1.3 = -3.38%
b.
The excess return of P&G today will be = -2.6% * 0.4 = -1.04%
