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defon
3 years ago
14

Unitron Corp. Is considering project Z, which costs $50 million and offers an annual after-tax cash flow of $7.5 million in perp

etuity. The project is in an industry that has greater market risk than Unitron's typical projects. Unitron's company weighted-average cost of capital, based on its typical projects, is 15%. Should Unitron Corp. Accept project Z?
Business
1 answer:
makkiz [27]3 years ago
7 0

Answer: No, because the NPV of the project is negative.

Explanation:

First calculate the present value of this project's cashflows.

As it is in perpetuity, the present value is;

= Annual Cashflow/ Discount rate

= 7,500,000/0.15

= $50,000,000

NPV = Present Value of Cashflow - Investment

= 50,000,000 - 50,000,000

= $0

We discounted using the company's WACC but this project is said to be in an industry that has greater risk than Unitron's other projects.

This means that the relevant rate will be higher than 15% and when NPV is computed with anything higher than 15% for this project, the NPV will be negative because 15% is where it is at $0.

This project should not be accepted because it will have a negative NPV.

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lbvjy [14]

Answer:

a. Decline

Explanation:

Whenever there is a reduction in the price level, this results in gains in the real money supply which eventually moves the LM curve to the right.

Hence, given that, the IS curve has a downward slope, the IS and LM curves will meet at a higher level of income and a lower interest rate.

Therefore, the correct answer, in this case, is Option A: DECLINE

Note LM means Liquidity and Money

While IS means Investment and Savings.

3 0
4 years ago
Marquis has a gross pay of $816. By how much will his gross pay be reduced if Marquis has the following items withheld?
Marysya12 [62]

Answer:

$174.66 which is d on edge

Explanation:

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7 0
3 years ago
What is the purpose of the customs department of a country’s government?
soldi70 [24.7K]

Answer:

Customs Duty is a tariff or tax imposed on goods when transported across international borders. The purpose of Customs Duty is to protect each country's economy, residents, jobs, environment, etc., by controlling the flow of goods, especially restrictive and prohibited goods, into and out of the country.

8 0
4 years ago
5. The process of production is complete
sleet_krkn [62]

The process of production is complete when retailers prepare goods for sale to consumers. Hence, Option C is correct.

<h3>What is the production process?</h3>

Capital, labour, technology, land, and other resources are considered factors of production because they are utilised to produce output, which includes commodities and services.

One of the most crucial procedures in manufacturing is production, which is essential to understanding what it means to be a manufacturer. Without this activity, there would be nothing produced that could be sold to buyers as finished goods.

Therefore, Option C is correct.

Learn more about production process from here:

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7 0
1 year ago
A company recently announced that it would be going public. The usual suspects, Morgan Stanley, JPMorgan Chase, and Goldman Sach
nignag [31]

Answer:

42.5

Explanation:

The computation of the expected value is shown below:

= Low price range × chance percentage +  high price range × chance percentage +  most likely price range × chance percentage

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= $1 + $10 + $31.5

= 42.5

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3 years ago
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