A salesgirl gets$20.00 for every$100.00 of bread she sells.In one month she sells 50 large loaves of bread at$12.00 each and 80
1 answer:
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Answer:
option (B) 35 years
Explanation:
Given:
Real per capita GDP of Sweden = $50,000
Real per capita GDP of Chile = $25,000
Growth rate of Sweden = 2%
Growth rate of Chile = 4%
As per the Rule of 70, the economy's GDP doubles in
Therefore,
The GDP of Sweden will double in = = 35 years
and,
Chile will double in = 17.5 years
Therefore,
in 35 years the GDP of Sweden will be $100,000
and,
In 35 years the GDP of Chile will also be ($50,000 in 17.5 years and $100,000 in next 17.5 years) = $100,000
Therefore,
The real GDP per capita in the two nations to converge in 35 years
Hence,
The correct answer is option (B) 35 years
Answer: The project should be accepted.
Explanation:
The Internal Rate of Revenue is used to evaluate projects before they are accepted. It is a rate that equates the Net Present Value of cashflows to zero.
If the IRR is higher than the Required return then the Project will be accepted because it means that NPV will be higher than zero. The reverse is true.
Given the cashflows in the question, the IRR is;
= 18.8% according to Excel.
With the IRR higher than the required return of 8%, the project should be accepted.
