Answer:
B. the winning potential of the sports team using the stadium
Explanation:
The formula for finding the net present value is -C0 + [C1 / (1 + r)] + [C1 / (1 + r)²] + [C1 / (1 + r)³].
<h3>What is the net present value?</h3>
The net present value is a capital budgeting method. Net present value is the present value of after-tax cash flows from an investment less the amount invested.
Only projects with a positive net present value should be accepted. A project with a negative net present value should not be chosen because it isn't profitable. When choosing between positive net present value projects, choose the project with the highest net present value first because it is the most profitable.
An advantage of the net present value method of capital budgeting is that it considers the times value of money. A disadvantage of net present value is that it is difficult to estimate the accurate discount rate.
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Answer:
Explanation:Since economic resources are scarce, they must be used efficiently. We want to produce as much goods and services as we can, and in the process, produce the goods and services needed the most. There are five functions an economic system performs in producing goods and services for consumption.
Answer:
The value of the firm or worth of the firm is $147058.82 rounded off to 2 decimal places
Explanation:
We first need to calculate the required rate of return for this firm that will be used as the discount rate in the valuation of the firm using the discounted cash flow methods.
Using the CAPM we can calculate the required rate of return as,
r = rRF + Beta * (rM - rRF)
Where,
- rRF is the risk free rate
- rM is the return on Market
So,
r = 0.04 + 0.4 * (0.11 - 0.04)
r = 0.068 or 6.8%
As the cash flows the firm can generate are expected to remain constant through out and they are generated after equal interval of time, this can be treated as a perpetuity.
The present value of a perpetuity is calculated as follows,
Present Value of perpetuity = Cash Flow / r
Present value of perpetuity = 10000 / 0.068
Present value of perpetuity = $147058.8235
So, the value of the firm or worth of the firm is $147058.82 rounded off to 2 decimal places
Answer:
Explanation:
The company must record the acquisition of that inventory, including all the expenses related to the purchase and logistics, up to have them placed in the company´s warehouse.
Therefore, the journal entry to record those transactions are:
Dr Inventory 8,200
Cr Cash 8,200
Notice that freight costs are not considered expenses in this case, as they are capitalized being part of the inventory cost.
<u>Income Statement</u>: no change
<u>Balance Sheet</u>: Inventory increased by $ 8,200
Cash decreased by $ 8,200
<u>Net change</u>: $ 0
