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leva [86]
3 years ago
14

Qualcomm has developed a groundbreaking new CPU chip. The patent on the chip will last 17 years. You expect that the chip’s prof

its to be $4 million in its first year and that this amount will grow at a rate of 5% per year for the next 17 years. Once the patent expires, Intel will be able to produce the same chip and competition will likely drive profits to zero. What is the present value of the new chip if the interest rate is 8% per year?
Business
1 answer:
umka21 [38]3 years ago
4 0

Answer:

$50.74 million

Explanation:

Interest rate per annum = 8%

Number of years = 17

Number of compounding per annum = 1

Interest rate per period (r) = 8%/1 = 8%

Number of period (n) =17 * 1 = 17

Growth rate (g) = 5%

First payment (P) = 4 ($'million)

PV of the new Chip = p/(r-g) * [1 - [(1+g)/(1+r)]^n]

PV of the new Chip = 4/(8%-5%) * [1 - [(1+5%)/(1+8%)]^17]

PV of the new Chip = 4/0.03 * [1 - [1.05/1.08]^17]

PV of the new Chip = 4/0.03 * [1 - 0.972222^17]

PV of the new Chip = 133.333 * (1 - 0.6194589804)

PV of the new Chip = 133.333 * 0.3805410196

PV of the new Chip = 50.7386757663268

PV of the new Chip = $50.74 million

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If the supply of aisle seats and middle seats on an airplane is the same, but the demand for aisle seats is greater than the dem
lys-0071 [83]

Answer:

False

Explanation:

Offer is the quantity of a product or service available for purchase. Demand is the amount of products or services that consumers are willing to buy.

When demand is higher than supply, product prices tend to rise as consumers are willing to pay more to get a particular item. On the other hand, when supply is higher than demand, prices tend to fall.

For this reason, we can conclude that if the demand for the airplane's aisle seats is greater than the demand for the middle seats; the price for the aisle seats will be higher than the price of the middle seats.

7 0
3 years ago
2. Consider a project which requires $1000 of initial investment and generates the next cash flows $300, $300 and $500 over the
den301095 [7]

Answer:

The project is profitable after  3.8 years

Explanation:

Year                           Cash Flow                            Cumulative  

0                                  -$1000                                  -$1000

1                                     $300                                    -$700

2                                     $300                                    -$400

3                                      $500                                     $100

400/500 0.8

<u>3.8 years</u>

4 0
3 years ago
If GDP is $15 trillion, how many years will it take for GDP to increase to $30 trillion if annual growth is 2 percent
Varvara68 [4.7K]
Y = original value • growth ^(time/period of growth)

30000000000000 = 15000000000000 • (1+0.02)^(x/1)

Divide both sides by 15 trillion

2 = (1.02)^(x)

take logarithm of both sides

log2 = log1.02^x

Bring x down using log law

log2 = xlog1.02

Divide both sides by log1.02

x = 35

35 years

8 0
2 years ago
In a bill-and-hold arrangement, revenue only can be recognized after the sale of the goods to the end user.
Verdich [7]

The correct answer is True. When ownership of the items passes to the customer, revenue is realised. In addition to the requirements for determining when control transfers, a reporting entity must also satisfy certain additional requirements for a customer to have achieved control in a bill-and-hold arrangement.

A bill and hold sales arrangement allows for payment in advance of the item's delivery. This is a sales agreement when a product seller invoices a consumer up front but doesn't actually ship the thing until later.

In a bill and hold transaction, the vendor does not deliver the purchased goods to the customer, but the associated income is still recorded. Under this structure, revenue cannot be recognised until a number of severe requirements have been satisfied. The possibility of falsely recognising revenue too early exists otherwise.

To learn more on bill and hold arrangement

brainly.com/question/14009218

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8 0
1 year ago
A(n) ____ is a separate, small, informal, highly autonomous, and often secretive group that focuses on breakthrough ideas for th
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A skunkwork is a separate, small, informal, highly autonomous, and often secretive group that focuses on breakthrough for the business.
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