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3 years ago

Splendid Systems is considering the following three investment opportunities:

Business

1 answer:

Leona [35]3 years ago

4 0

Answer:

Missing question: <em>Required The discount rate is 14%. Use the net present value method to determine which, if any of the projects is acceptable.</em>

<em />

I. Present value of inflows = $8,100*Present value of annuity factor(14%,5) = $8,100 * 3.433 = $27,807.3

NPV = Present value of inflows - Present value of outflow = $27,807.30 - $39,000 = -$11,192.7

II. Present value of inflows = $40,000*Present value of discounting factor(14%,5) = $40,000/1.14^5 = $40,000/1.9254 = $20,774.90

Present value of outflows = $8,000*Present value of annuity factor(14%,5) = $8,000*3.433 = $27,464

NPV = Present value of inflows - Present value of outflow = $20,774.90 - $27,464 = -$6,689.10

III. Present value of inflows = $62,000*Present value of discounting factor(14%,5) = $62,000/1.14^5 = $62,000/1.9254 = $32,201.10

NPV = Present value of inflows-Present value of outflow = $32,201.10 - $35,000 = -$2,798.90

Conclusion: Option 3 is better by having a higher NPV, but all the projects are acceptable if they are independent.

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Marizza181 [45]

The answer is Big Data

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3 years ago

Assume that Bolton Company will pay a $2.00 dividend per share next year, an increase from the current dividend of $1.50 per sha

Gwar [14]

Answer:

None of the options are correct as the price today will be $26.786

Explanation:

The price of a stock whose dividends are expected to grow at a constant rate forever can be calculated using the constant growth model of the dividend discount model approach (DDM). The DDM bases the value of a stock on the present value of the future expected dividends from the stock.

The formula for price under constant growth model is,

P0 = D1 / (r - g)

Where,

D1 is the dividend expected for the next period
r is the required rate of return or cost of equity
g is the growth rate in dividends

However, as the constant growth rate in dividends is to be applied from Year 2 onwards, we will use the D2 to calculate the price at Year 1 and we will then discount this further for one year to calculate the price today.

P1 or Year1 price = 2 * (1+0.05) / (0.12 - 0.05)

P1 or Year 1 price = $30

The price of the stock today or P0 will be,

P0 = 30 / (1+0.12)

P0 = $26.786

3 0

4 years ago

What was the trade discount rate if merchandise with a list price of $14,200 was sold at a net price of $9,940?

Marianna [84]

30% off. 14,200 multiplied by 0.7 equals 9,940. 1.0 - 0.7 = 0.3

6 0

4 years ago

The manufacturing cost of Calico Industries for three months of the year are provided below:

Delvig [45]

Answer:

b. $0.40 per unit and $8,000

Explanation:

High low method separates the fixed cost and variable cost using net of Highest activity level and Lowest activity level and net of their relevant costs.

According to High low method

Variable cost per unit = ( Highest activity cost - Lowest activity cost ) / ( Highest Activity - Lowest activity )

Variable cost per unit = ( $120,000 - $74,000 ) / ( 280,000 - 165,000 )

Variable cost per unit = $46,000 / 115,000

Variable cost per unit = $0.4

Fixed operating cost = Total cost - Total Variable cost = $120,000 - ( 280,000 x $0.4 ) = $8,000

4 0

4 years ago

A decrease in operating expenses would have which of the following effects on a company's profit margin? Multiple Choice There i

kati45 [8]

Answer: Net profit margin would increase.

Explanation:

A company's net profit margin is the Net Profit divided by Revenue. Net Profit is derived by subtracting some expenses and liabilities from the Revenue such as Cost of Goods as well as operating expenses.

If operating expenses were to reduce therefore, there would be less subtractions from the revenue. The would translate to a higher Net Profit and when that is then divided by the Revenue, it will give a higher Net Profit Margin.

3 0

3 years ago