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
KATRIN_1 [288]
3 years ago
14

Internal rate of return method The internal rate of return method is used by Testerman Construction Co. in analyzing a capital e

xpenditure proposal that involves an investment of $149,630 and annual net cash flows of $45,000 for each of the six years of its useful life. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below. Open spreadsheet Determine the internal rate of return for the proposal.
Business
1 answer:
Eddi Din [679]3 years ago
7 0

Answer:

Testerman Construction Co.

Internal rate of return method in analyzing capital expenditure:

Present value of expenditure = $149,630

Present of cash inflows annuity = $149,630 (using 20% discount rate and present value annuity factor of 3.3251 x $45,000)

NPV = $0 (PV of cash outflow - PV of cash inflow)

Therefore, the IRR = 20%

Explanation:

a) Data and Calculations:

Investment cost = $149,630

Annual net cash flows = $45,000

Investment period = 6 years

Annuity of future cash flows = 3.3251

b) Testerman’s IRR (Internal Rate of Return) is a capital budgeting and analysis tool which determines the discount rate that makes the present value of future inflows equal to the present value of outflows from a project.  This IRR helps the managers to determine the projects that add value and are worth undertaking.  IRR is based on assumptions.  Similar projects with the same IRR will differ in returns due to the differences in timing and the size of the cash, the amount of debts and equity used  to generate the returns, and the assumption of a constant reinvestment may which IRR makes.

You might be interested in
Brand ambassadors are volunteers spreading a company's brand message, while brand evangelists are paid employees using potential
eimsori [14]

Answer – False

 

Brand ambassadors are typically hired by a company to represent their brand, with the goal of increasing public awareness and ultimately, the sales of the brand. A brand evangelist, on the other hand, is usually a customer or true fan who is passionate about spreading a company's brand message.

8 0
3 years ago
22)
frosja888 [35]

Answer:

A and B

Explanation:

4 0
3 years ago
Which one of the following choices is the responsibility of the team leader? Set project expectations Outline the ideas to be di
mrs_skeptik [129]
<span>Which one of the following choices is the responsibility of the team leader? Outline the ideas to be discussed. The project manager will set the goal of the project and then the team leader is in charge to help outline to all members what the project should entail. It is important to make sure all members complete their part to have one completed project for everyone on the team to receive the same outcome from. Team </span>settings are great for diversity but all members must work together. 
4 0
3 years ago
The Petit Chef Co. has 7 percent coupon bonds on the market with 9 years left to maturity. The bonds make annual payments and ha
PilotLPTM [1.2K]

Answer:

The YTM is 6.45%

Explanation:

Yield to maturity is the annual rate of return that an investor receives if a bond bond is held until the maturity.

Face value = F = $1,000

Coupon payment = $1,000 x 7% = $70

Selling price = P = $1,038.50

Number of payment = n = 9 years

Yield to maturity = [ C + ( F - P ) / n ] / [ (F + P ) / 2 ]

Yield to maturity = [ $70 + ( $1,000 - $1,038.5 ) / 9 ] / [ (1,000 + $1,038.5 ) / 2 ]

Yield to maturity = [ $70 - $4.28 ] / $1,019.25  = $65.72 /$1,019.25 = 0.0645 = 6.45%

7 0
3 years ago
If the U.S. economy is producing at a level that is substantially less than potential GDP and the government's budget deficits a
diamong [38]

Answer:

an inflationary increase in the price level.

Explanation:

Monetary policy can be defined as the actions (macroeconomic policies) adopted and undertaken by the central bank of a particular country to control the money supply and interest rates so as to boost or enhance economic growth. The central bank uses monetary policies to manage inflation, economic growth through long-term interest rates and level of unemployment in a country.

In order to boost economic growth, a monetary policy is implemented to increase money supply (liquidity). Also, it is used to prevent inflation by reducing money supply.

An inflationary gap, also referred to as an expansionary gap in economics, is typically used for measuring the difference between the gross domestic product (GDP) and the current level of Real Gross Domestic Products that exists when a country's economy is gauged at a full employment rate. Consequently, this situation causes the price of goods and services to go up with a low income level among the people living in the country.

A budget deficit is the amount by which spending exceeds income.

All other factors held constant or all things being equal (ceteris paribus), an increase in government's budget deficit drives the interest rate up.

Generally, when there's a deficit in government budget, they resort to issuing more bonds or borrowing money from creditors. These creditors are likely to be sceptical about the government's ability to repay the debt and as such would increase the interest rate.

Hence, an inflationary increase in the price level of goods and services is not much of a danger if the U.S. economy is producing at a level that is substantially less than potential gross domestic product (GDP) and the aggregate demand is being increased by government's budget deficits.

3 0
3 years ago
Other questions:
  • If Carly shows the interviewer that she is familiar with European Union regulations and knowledgeable about how people in German
    14·1 answer
  • Which type of cybercriminal attack would interfere with established network communication through the use of constructed packets
    12·2 answers
  • Which of the following statements is INCORRECT? A : Faithful representation results when different companies use the same accoun
    15·1 answer
  • ) Suppose I ask you to pick any four cards at random from a deck of 52, without replacement, and bet that if at least one of the
    10·1 answer
  • How might a trade deal that allows two nations to freely exchange goods affect the circular flow of income? Neither country is l
    5·1 answer
  • Firelight Company manufactures candles. The standard direct materials quantity required to produce one large candle is one pound
    8·1 answer
  • In the United States, many agricultural products (such as corn, wheat, and rice) are subsidized. What are the benefits of subsid
    12·1 answer
  • Liam, an employee of Centaurs Inc., is part of a new product development team that operates in a completely different manner fro
    10·1 answer
  • Based on this case, why is it necessary to have laws related to sharing confidential information? to prevent businesses from man
    11·2 answers
  • Suppose that a country's economy is operating at an unemployment rate 6% higher than its natural rate of unemployment. Then a(n)
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!