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Sunny_sXe [5.5K]
3 years ago
8

Labeau Products, Ltd., of Perth, Australia, has $21,000 to invest. The company is trying to decide between two alternative uses

for the funds as follows:
Invest in Invest in
Project X Project Y
Investment required $ 21,000 $ 21,000
Annual cash inflows $ 8,000
Single cash inflow at the end of 6 years $50,000
Life of the project 6 years 6 years
The company’s discount rate is 18%.
Required:
Determine the net present values. (Any cash outflows should be indicated by a minus sign.
Business
1 answer:
VLD [36.1K]3 years ago
7 0

Answer:

Project X = $6,980.82

Project Y = - $2,478.42

Explanation:

The Present value is the price today of future cash flows and is calculated as follows :

Project X

($21,000) CF 0

$8,000    CF 1

$8,000    CF 2

$8,000    CF 3

$8,000    CF 4

$8,000    CF 5

$8,000    CF 6

I/YR = 18%

Therefore, NPV is $6,980.82

Project Y

($21,000) CF 0

$0    CF 1

$0    CF 2

$0    CF 3

$0    CF 4

$0    CF 5

$50,000    CF 6

I/YR = 18%

Therefore, NPV is - $2,478.42

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The deadweight loss from a tax per unit of good will be smallest in a market with a. inelastic supply and elastic demand. b. ine
deff fn [24]

The deadweight loss from a tax per unit of good will be smallest in a market with inelastic supply and inelastic demand.

The Deadweight loss refers to loss that occurs when supply and demand are not in equilibrium and thus, result in market inefficiency.

Usually, the value of the deadweight loss varies with the demand elasticity and supply elasticity.

So, when the demand or supply is inelastic, the deadweight loss of the taxation will be smaller because the quantity bought or sold varies less with price.

Therefore, the answer is B. because the deadweight loss from a tax per unit of good will be smallest in a market with inelastic supply and inelastic demand.

Learn more about this here

<em>brainly.com/question/13719669</em>

7 0
2 years ago
Greiner, Inc., a calendar year S Corporation, holds no AEP. During the year, Chad, an individual Greiner shareholder, receives a
Likurg_2 [28]

Answer:

The long term capital gain= $30000-$25000

The long term capital gain= $5000

The basis in stock will be zero after the distribution.

Explanation:

Step 1 of 3

Tax treatment of amount distributed to shareholders:

The amount received as distribution to a shareholder under S Corporation is equal to the cash and fair market value of property distributed. The distribution is considered as tax-free to the limit that it does not exceed shareholder’s basis in the company’s stock. Any amount received in excess of basis will be treated as capital gain.

Step 2 of 3

However, taxation depends whether S Corporation has ever been a C Company or it posses’ accumulated earnings and profits. If it was never a C Corporation or doesn’t holds AEP then distribution equals to basis of share in S Corporation is a tax free gain for shareholder. Gain over and above basis is taxed as capital gains.

Step 3 of 3

In the given problem, C is a shareholder in S Corporation. He receives $30,000 as cash distribution. His basis in stock is $25,000. The distribution up to basis of stock is tax free distribution and above that is charged to capital gains. It is as follows-

Thus, capital gain of  is taxable in hands of C. His basis in S Corporation will reduced to zero as entire distribution is over and above basis of his stock.

3 0
3 years ago
When might a company be criticized for its lack of corporate social responsibility? A. After cutting wages and benefits in order
gayaneshka [121]

A. After cutting wages and benefits in order to increase profit

Explanation:

As a company that exists in an environment, it has a responsibility to socially responsible for its actions that affect its environment including individuals(employees)

The employees are part of the social environment, so cutting their wages and benefits does not make the company socially responsible.

#learnwithbrainly

3 0
3 years ago
Saphire Company budgeted the following production in units for the second quarter of the year:
Ugo [173]

Answer:

Instructions are below.

Explanation:

Giving the following information:

Sales:

April 45,000

May 38,000

June 42,000

Each unit requires one pound of raw material. Saphire's policy is to have 30% of the following month's production needs for materials in inventory.

A) Budgeted production= sales + desired ending inventory - beginning inventory

Budgeted production:

Sales=38,000

Ending inventory= 42,000*0.3= 12,600

Beginning inventory= 38,000*0.3= (11,400)

Total= 39,200

B) Desired beginning inventory= budgeted sales*30%

Beginning inventory= 42,000*0.3= 12,600

6 0
3 years ago
Suppose a farmer in Georgia begins to grow peaches. He uses​ $1,000,000 in savings to purchase​ land, he rents equipment for ​$7
Mazyrski [523]

Answer:

Economic profit = $300,000

Explanation:

<em>Economic profit is the difference between the sales revenue and the total of implicit cost and explicit cost</em>

Implicit cost are opportunity costs. For the farmer, these include

Interest on capital forfeited and salaries forfeited

= (22%×  1,000,000) + 40,000

= 260,000

Total cost = Implicit +explicit costs

=  260,000 + 260,000 +70,000 +120,000

 Economic profit =750000- (260,000 +70,000 +120,000)

                         = $300,000

Note that the cost of land is not included because it a capital cost

8 0
3 years ago
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