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eduard
3 years ago
15

Suppose that you are considering the development of a residential subdivision. The development will require you to spend $300,00

0 today to acquire the land. You will also have to spend $750,000 in both years 1 and 2 in order to build the houses. You expect to make $1.5 million in year 3 and $2 million in year 4 from sales of the completed homes. What is the internal rate of return of this project
Business
1 answer:
podryga [215]3 years ago
6 0

Answer:

32.52%

Explanation:

Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested

IRR can be calculated with a financial calculator  

Cash flow in year 0 = $-300,000.

Cash flow in year 1  and 2 = $-750,000

Cash flow in year 3 = $1.5 million

Cash flow in year 4 = $2 million  

IRR = 32.52%

To find the IRR using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button.  

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Jenkins Inc. has a target capital structure of 40% debt and 60% common equity, with no preferred stock. The YTM on the company’s
Natalka [10]

Answer:

15.57%

Explanation:

The WAAC (Weighted average cost of capital) is given by:

WAAC = M*W_d*(1-T)+E*W_E

Where M is the rate to maturity of the company's bonds, Wd is the fraction of debt, We is the fraction of equity, T is the tax rate, and E is the rate of cost of common equity. Applying the given data:

0.115=0.09*0.4*(1-0.4)+E*0.6\\E=0.1557\\E=15.57\%

The company’s cost of common equity is 15.57%.

5 0
3 years ago
In January 2021 Red Co. purchased a patent at a cost of $202,000. Legal and filing fees of $70,000 were paid to acquire the pate
Aleks [24]

Answer:

$229,400

Explanation:

Here for computation of charged to income (expense and loss) first we need to find out the total cost of the patent and amortization expenses for three year which is shown below:-

Total cost of the patent = Patent cost + Legal and filing fees

= $202,000 + $70,000

= $272,000

Amortization expense for three years = Total cost of the patent ÷ Useful life × 3 years

= $272,000 ÷ 10 × 3 years

= $81,600

Net Patent cost = Total cost of the patent - Amortization expense for three years

= $272,000 - $81,600

= $190,400

Now,

The amount charged to income (expense and loss) in 2024 related to the patent = Net Patent cost + Incurred legal fees

= $190,400 + $39,000

= $229,400

Therefore for computing amount to be charged to income we simply added the net patent cost and the legal fees spend

7 0
3 years ago
A company should select the capital structure that Blank______. Multiple choice question. results in the lowest taxes maximizes
mario62 [17]

A company should select the capital structure that maximizes the company's value.

A company's capital structure refers to its decisions regarding the upkeep of financing.

  • Company size and maturity determines capital structure.
  • The capital used for financing a business is referred to as its capital structure.
  • Shareholder's equity, debt, and preferred stock are all included in the balance sheet that is finally drawn up under the capital structure of a company.
  • Capital structure enumerates the funds that help the company operate, hence its importance for the company.
  • To maximize the company's value it becomes increasingly important for the company to select an ideal capital structure.

Therefore, a company should select the capital structure that maximizes the company's value.

Learn more about the capital structure of a company here: brainly.com/question/6660014

#SPJ4

6 0
2 years ago
The company wants to end each month with ending finished goods inventory equal to 10% of the next month’s sales. Finished goods
exis [7]

Answer:

Budgeted production in January 2,910 units

Explanation:

Calculation for the budgeted production units for January

Using this formula

Budgeted production in January= Budgeted sales + Desired ending inventory - Beginning inventory available

Let plug in the formula

Budgeted production in January=2,800 + (3,900*10%) - 280

Budgeted production in January=$2,800+$390-280

Budgeted production in January= 2,910 units

Therefore the Budgeted production in units for January are: 2,910 units

5 0
4 years ago
After being referred by a friend hedyeh attended a job interview she didn't feel it went well but she was surprised when her fri
myrzilka [38]

Answer: Discrimination

6 0
3 years ago
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