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antoniya [11.8K]
4 years ago
14

Misty Mountain Shop is considering purchasing a new piece of equipment that would be used for 6 years. The cost savings from the

equipment would result in an annual increase in cash flow of $200,000. The equipment will have an initial cost of $900,000 and a salvage value of $100,000 at the end of its useful life. If the discount rate is 8%, what is the approximate net present value of purchasing this new piece of equipment?
Business
1 answer:
Allisa [31]4 years ago
8 0

Answer:

NPV = $ 87,592.90

Explanation:

Net present value is calculated by taking the Present Day (discounted) value of all future Net Cash Flow based on the Business Cost of Capital and subtracting the Initial cost of the Investment.

<u>Calculation of Net present value (Financial Calculator)</u>

Period and Cash flow

CF0   = ($900,000)

CF1    =  $200,000

CF2    =  $200,000

CF3    =  $200,000

CF4    =  $200,000

CF5    =  $200,000

CF6    =  $300,000

Cost of Capital = 8%

NPV = $ 87,592.90

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Sphinxa [80]

Answer:

the interest payable is $210,000

Explanation:

The computation of the interest payable is shown below:

= Principal payments × rate of interest × no of months ÷ total no of months × time period

= $350,000 × 6% × 6 months  ÷ 12 month × 20years

=  $210,000

hence, the interest payable is $210,000

The same should be considered and relevant

8 0
3 years ago
A 60-year old man is looking to create a portfolio that will provide current income and preservation of capital. Which of the fo
ohaa [14]

Answer:

The correct answer is letter "B": Treasury bills, a money market mutual fund and bank certificates of deposit.

Explanation:

One of the distinctive features of Treasury Bills is that the government does not periodically pay the holder's interest, instead, the securities are priced under face value, which results in a profit at maturity. Treasury bills offer two major benefits: their lack of risk and tax advantages over other investment opportunities.

Mutual funds are a pool of assets put together to reduce risk and provide small investors the opportunity to access a professionally managed investment vehicle. Certificates of Deposit (CDs) require account holders to keep their money for a certain period so they can benefit from higher interest rates.

Therefore, <em>Treasury Bills, mutual funds, and CDs represent the best investment vehicles the 60-year-old man can choose from to generate income while preserving capital.</em>

7 0
3 years ago
If the expected returns of two stocks are the same but the standard deviations of the returns differ, which security is to be pr
serious [3.7K]
What you’re talking about is Beta. Beta is the ratio of how much a stock changes relative to the market as a whole (NYSE, NASDAQ)

A Beta of 2.0 means it changes (up/down) twice as much as the general market (Dow, S & P, NAS), such as the twitchy, hyper reactive tech stocks ( FAANG’s and also boom-or-bust Big Oil). In other words, high Standard Deviations.

A Beta of 0.5 means it changes (up/down) half as much as the general market. Sleepy blue chips such as GE, AT&T or power utilities fall in that category. Low Standard Deviations

Most stocks by definition pretty much track the market (Beta 1.0) so there are a lot of those. Middling Standard Deviations

So…it is dictated by your risk tolerance.
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3 years ago
__________ is the market situation in which there are many sellers in a market and no seller is large enough to dictate the pric
MaRussiya [10]

Answer: Perfect competition

Explanation: In a perfect competition market structure the number of sellers in the market is very large with each individual seller operating at a very small level. Due to small operation, no individual seller is capable enough to dictate or affect the price in the market.

The sellers in perfect competition are bound to take prices determined by market forces of demand and supply.

4 0
4 years ago
Pacific Ink had beginning work-in-process inventory of $1,070,790 on October 1. Of this amount, $436,900 was the cost of direct
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Answer:

hello dummy

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2 years ago
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