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Nana76 [90]
3 years ago
5

Assume Ford Motors expects a new hybrid-engine project to produce incremental cash flows of $50 million each year, and expects t

hese to grow at 4% each year. The upfront project costs are $420 million and Ford's weighted average cost of capital is 9%. If the issuance costs for external finances are $20 million, what is the net present value (NPV) of the project?A) $560 million
B) $616 million
C) $588 millionD) $504 million
Business
1 answer:
photoshop1234 [79]3 years ago
8 0

Answer:

A) $560 million

Explanation:

First lets calculate the NPV of the cash stream by this investment,

PV Cash stream = Cash flow/ (r-g), where r = avg cost of capital and g = growth of the cash stream.

PV = 50 / (0.09 - 0.04)  = $1000 million

We assume that external finance issuance costs are payable as a part of initial outlay of the project and so,

Total initial outlay = 420 + 20 = $440 million

NPV of the project then,

NPV = 1000 - 440 = $560 million

Hope that helps.

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Tyler Smithson owns Joe on the Run, a small chain of three cof- fee shops, all of which are facing a challenge that is common to
prohojiy [21]

Answer:

A) To improve capacity the constraint that must be addressed is the preparation and dispatch constraint which is similar to all three shops.to address this a central preparation / dispatch center that serves all three shops the needed products should be created independently, with the primary purpose of mass preparation/dispatch to the coffee shops  and not attending to customers which hampers the production of the three shops.

B ) To improve efficiency: packaging should be made ready at the drive thru station so that customer who drive in can quickly pick up the package without having to queue up for long. also consider preparing some orders on the menu that attracts the most customers ahead of time this way the queue would be reduced.

C ) At store level to improve performance proper stock taking should be essential to ensure there is enough products on the menu to serve to the customers

Explanation:

A) To improve capacity the constraint that must be addressed is the preparation and dispatch constraint which is similar to all three shops.to address this a central preparation / dispatch center that serves all three shops the needed products should be created independently, with the primary purpose of mass preparation/dispatch to the coffee shops  and not attending to customers which hampers the production of the three shops.

B ) To improve efficiency: packaging should be made ready at the drive thru station so that customer who drive in can quickly pick up the package without having to queue up for long. also consider preparing some orders on the menu that attracts the most customers ahead of time this way the queue would be reduced.

C ) At store level to improve performance proper stock taking should be essential to ensure there is enough products on the menu to serve to the customers

7 0
3 years ago
Farm subsidies account for approximately ________ of net agricultural income, making America's farmers among the most heavily su
Ronch [10]

Answer:

One fifth

Explanation:

Farm subsidies account for approximately <u>one fifth</u> of net agricultural income, making America's farmers among the most heavily subsidized in the world.

American governement provide subsidy to the farmer to incourage farming in United States and help them to hedge the risk out of demand disruption, price fluctuation, climatic changes, etc. In 2019, US governement payout $22 billion subsidy directly to the farmer, which make it highest subsidized farmer in the world. It has encouraged farmer to produce more crops like Corns, Wheat, rice, soyabean, cotton, etc. As new farm bill was passed at US parliament in 2014, however, higher subsidy process have become more complex, which is benefiting only to the rich farmers in United states.

3 0
3 years ago
What determines how the burden of tax is divided between buyers and sellers? Why?
Artemon [7]

Answer:

Explanation:

Taxation is the means by which the government  gets most of its  revenue so it is the duties of private or publicly owned organizations and also the citizen to pay their taxes used by the government to fund all its projects. the taxes generated by the government are then divided among buyers and sellers.

The elasticity of demand is the main determinant of how burden of tax is divided between buyers and sellers.

6 0
3 years ago
Read 2 more answers
ring its first five years of operations, Della Manufacturing reports net income and pays dividends as follows. Year Net Income D
miv72 [106K]

Answer: See explanation

Explanation:

The retained earnings will be calculated as:

= Begining retainers earnings + Net income - Dividend.

Year 1:

Retained earning = 0 + 2000 - 1700

= 300.

Year 2:

Retained earning = 300 + 2600 - 1600

= 1300

Year 3:

Retained earning = 1300 + 2600 - 2200

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Year 4:

Retained earning = 1700 + 5900 - 2900

= 4700

Year 5:

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= 10400

3 0
3 years ago
Which one of the following actions by a financial manager is most apt to create an agency problem? Increasing current profits wh
MrRissso [65]

Answer: Increasing current profits when doing so lowers the value of the company's equity.

Explanation:

The main purpose of a company is to increase the wealth of shareholders. In their capacity as stewards for the company, managers should be working therefore to achieve this goal.

When management neglects this goal and begins to seek an improvement in their welfare and wealth instead of the shareholder', this is an Agency problem.

If a Financial manager is increasing current profits even though doing so will lower the value of the company's equity, this can create an agency problem because the shareholders are suffering but the finance manager might get rewarded for increasing profits.

6 0
2 years ago
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