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2 years ago

5

Park Co. is considering an investment that requires immediate payment of $21,705 and provides expected cash inflows of $6,700 an

nually for four years. Assume Park Co. requires a 7% return on its investments.
Required:
What is the net present value of this investment?

1 answer:

hjlf2 years ago

8 0

Answer:

The net present value of this investment is $989.32

Explanation:

The Net Present Value is calculated by taking the Present Day (discounted) value of all future net cash flows based on the business cost of capital and subtracting the initial cost of investment.

Input Value Cash flow

CF0 ($21,705)

CF1 $6,700

CF2 $6,700

CF3 $6,700

CF4 $6,700

Cost of Capital = 7%

Input the values in a financial calculator we get the result;

Net present value = $989.3154

= $989.32

Conclusion :

The net present value of this investment is $989.32

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2 years ago

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LeCompte Corp. has $312,900 of assets, and it uses only common equity capital (zero debt). Its sales for the last year were $620

Gnom [1K]

Answer:

LeCompte Corp.

The profit margin that LeCompte Corp. would need in order to achieve the 15% ROE, holding everything else constant is:

A) 7.57%.

Explanation:

a) Data and Calculations:

Assets = $312,900

Common Equity = Assets = $312,900

Sales for the last year = $620,000

Net income after taxes = $24,655

Expected return on equity (ROE) = 15%

ROE (in amount) = $312,900 * 15% = $46,935

Profit margin = Returns on Equity/ Sales * 100

= $46,935/$620,000 * 100

= 7.57%

b) The expected returns on equity in dollars is equal to the net income. Therefore, we can use the ROE to calculate the profit margin. The profit margin expresses the relationship between sales and profit. It shows the profit made from each dollar sales.

4 0

2 years ago

A company begins a review of ordering policies for its continuous review system by checking the current policies for a sample of

Maru [420]

Answer:

Explanation:

Given that:

weekly demand = 72 units

no of weeks in 1 year = 48

Then; total demand = 72 × 48 = 3456 units

No of orders = $\dfrac{\text{total demand }}{EOQ}$

= $\dfrac{\text{3456}}{145}$

∴

The periodic review (P) = $\dfrac{1}{no \ of \ orders}$

= $\dfrac{1}{\dfrac{3456}{145}}$

$= \dfrac{145}{3456}$

= 0.041956 year

≅ 2 weeks

Z score based on 88 percent service level = NORMSINV(0.88) = 1.18

Here;

Lead time = 3 wks

P = 2 weeks

Thus protection interval = ( 3+2) weeks

= 5 weeks

Safety stock = z-score × std dev. of demand at (P+L) days

std dev = $\sqrt{5 } \times 18$ = 2.236 × 18

std dev = 40.248 units

Safety stock = 1.18 × 40.248

safety stock = 47.49 units

Safety stock ≅ 48 units

Average demand during(P + L) = 5 × 72 units

= 360 units

Target inventory level = average demand + safety stock

= 360 units + 48 units

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3 0

2 years ago

Using a cost-benefit analysis to make ethical decisions about research reflects a(n) _________ perspective.

hram777 [196]

Using a cost-benefit analysis to make ethical decisions about research reflects a(n) Utalitarian perspective.

<h3>What Is Utilitarianism?</h3>

The term Utilitarianism is known to be a kind of a theory that is based on morality and this is known to be one that tends to advocates for actions that brings about happiness or pleasure and it is one that is against actions that leads to unhappiness or harm.

Hence, if directed toward creating social, economic, or political decisions, a utilitarian philosophy is said to often aim for the growth of society as one or as a whole.

Hence, Using a cost-benefit analysis to make ethical decisions about research reflects a(n) Utalitarian perspective.

Learn more about Utalitarian perspective from

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1 year ago

Max's Kennels spent $220,000 to refurbish its current facility. The firm borrowed 60 percent of the refurbishment cost at 5.95 p

Jlenok [28]

Answer:

The monthly payment is $2184.52

Explanation:

Given

$Total\ Amount\ Spent\ = $220,000$

$Amount\ Borrowed = 60\%$

$Rate = 5.95\%$

$Duration = 6\ years$

Required

$Monthly\ Payment$

Firstly, the loan amount has to be calculated

The Question says; of the total amount spent, only 60% was borrowed;

So;

$Loan = 60\%\ of\ 220,000$

$Loan = 132,000$

The monthly payment can then be calculated using the following formula

$Amount = P * \frac{r}{12} * \frac{(1 + \frac{r}{12})^n}{(1 + \frac{r}{12})^n - 1}$

Where P = Loan Amount = 132,000

r = rate of payment = 5.95% = 0.0595

n = duration (in month)

n = 6 years

n = 6 * 12 months

n = 72 months;

Substitute the above parameters in the formula;

$Amount = P * \frac{r}{12} * \frac{(1 + \frac{r}{12})^n}{(1 + \frac{r}{12})^n - 1}$ becomes

$Amount = 132,000 * \frac{0.0595}{12} * \frac{(1 + \frac{0.0595}{12})^{72}}{(1 + \frac{0.0595}{12})^{72} - 1}$

$Amount = \frac{132,000*0.0595}{12} * \frac{(1 + \frac{0.0595}{12})^{72}}{(1 + \frac{0.0595}{12})^{72} - 1}$

$Amount = \frac{132,000*0.0595}{12} * \frac{(1 + \frac{0.0595}{12})^{72}}{(1 + \frac{0.0595}{12})^{72} - 1}$

$Amount = 654.5 * \frac{(1 + \frac{0.0595}{12})^{72}}{(1 + \frac{0.0595}{12})^{72} - 1}$

$Amount = 654.5 * \frac{(\frac{12.0595}{12})^{72}}{(\frac{12.0595}{12})^{72} - 1}$

$Amount = 654.5 * \frac{(1.0049583)^{72}}{(1.0049583)^{72} - 1}$

$Amount = 654.5 * \frac{1.42777239524}{1.42777239524 - 1}$

$Amount = 654.5 * \frac{1.42777239524}{0.42777239524}$

$Amount = 2184.51925155$

$Amount = 2184.52\ (Approximated)$

<em>Hence, the monthly payment is $2184.52</em>

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3 years ago