Answer:
-0.95
inelastic
Explanation:
minor league baseball team raised the average price of its tickets from $8 to $8.90 and found that average attendance at its games dropped from 5, 200 to 4, 700. Using the arc elasticity of demand formula, the price elasticity of demand for tickets is .(Express your answer as a real number rounded to two decimal places. Don't forget the negative sign.) The demand for tickets is therefore
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = midpoint change in quantity demanded / midpoint change in price
Midpoint change in quantity demanded = change in quantity demanded / average of both demands
change in quantity demanded = 4700- 5200= -500
average of both demands = (4700 + 5200 ) / 2 = 4950
Midpoint change in quantity demanded = 500 / 4950 = -0.101
midpoint change in price = change in price / average of both price
change in price = 8.9 - 8 = 0.9
average of both price = (8.9 + 8) / 2= 8.45
0.9 / 8.45 = 0.107
-0.101 / 0.107 = -0.95
If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.
Demand is inelastic if a small change in price has little or no effect on quantity demanded. The absolute value of elasticity would be less than one
Demand is unit elastic if a small change in price has an equal and proportionate effect on quantity demanded.
Infinitely elastic demand is perfectly elastic demand. Demand falls to zero when price increases
Perfectly inelastic demand is demand where there is no change in the quantity demanded regardless of changes in price.
0.1125
-0.1754
a sales rep, has just learned that she will be allowed to text with her colleagues and clients during work hours. What is the best advice you can give her to ensure that she is using this tool professionally
Answer:
Remember this is your workplaces, if you wouldn't do it in front of your boss, dont do it at all.
Explanation:
It can be very tempting to text or play on your phone while bored at work. It's best to put it away and use it only during lunch.
The IPO process involves several entities, such as the issuing company, institutional investors, brokers, lawyers, regulators, retail investors, and an intermediary company. Consider the following IPO deal:
In 1999, Goldman Sachs Group and its partners, Sumitomo Bank Capital Markets Inc. and Kamehameha Activities Association, raised $3.6 billion its initial public offering in the United States and Canada. Goldman Sachs & Co., Bear Stearns & Co. Inc., Credit Suisse First Corporation, Lehman Brothers Inc., and J.P. Morgan Securities Inc. became some of the U.S. representatives the deal by entering into an agreement to sell a certain number Of shares to potential investors at a predetermined.
Identify one of the underwriters in the IPO deal described above.
a. J.P. Morgan Securities Inc.
b. Kamehameha Activities Association
Answer:
The IPO Process
One of the underwriters in the IPO deal described above is.
a. J.P. Morgan Securities Inc.
Explanation:
J.P. Morgan Securities Inc. and the following underwriters, Goldman Sachs & Co., Bear Stearns & Co. Inc., Credit Suisse First Corporation, and Lehman Brothers Inc. was involved in the Initial Public Offering (IPO) in 1999, where $3.6 billion was raised in the United States and Canada. An underwriter is a financial specialist, working closely with the issuing houses to determine the initial offering price of the securities. The underwriters usually buy the securities from the issuer and then sell them to investors using its distribution network.
Given the following information, what are the NZD/SGD currency against currency bid-ask quotations?
American Terms European Terms Bank Quotations Bid Ask
New Zealand dollar 0.7265 0.7272 1.3751 1.3765
Singapore dollar 0.6135 0.614 1.6287 1.63
Answer:
In American terms: 0.8436 ÷ 0.8451
In European Terms: 1.1832 ÷1.1853
Explanation:
the computation of the NZD/SGD currency against currency bid-ask quotations is shown below:
In american terms In european terms
USD/NZD 0.7265 ÷ 0.7272 E/NZD 1.3751 ÷ 1.3765
USD/SGD 0.6135 ÷ 0.6140 E/SGD 1.6287 ÷ 1.6300
NZD/SGD = (0.6135 ÷ 0.7272) ÷ (0.6140 ÷ 0.7265) = 0.8436 ÷ 0.8451
(1.6287 ÷ 1.3765) ÷ (1.6300 ÷ 1.3751) = 1.1832 ÷ 1.1853
Your company has decided to give employees yearly mental health days, in addition to the sick leave and vacation days that already exist. The company sends out an e-mail to employees explaining the new benefit and urges them to take care of themselves and to understand the importance of good mental health. The leaders of this company probably think of leadership as which of the following?
a. relationship
b. skill
c. influence
d. process
Answer:
A relationship because he/she is reaching out personaly
After getting her degree in Economics, Jeanine went to work for the Bureau of Labor Statistics. She compiles data on the unemployment rate, which serves as an economic indicator. What does this data help Jeanine to understand
Answer:
A. how the economy is doing at the macro level
Explanation:
Since in the given situation it is mentioned that jeanine wants to work so she combined the unemployment rate data that represent the economic indicator so here she need to understand that how the economy is working at the macro level as the unemployment represent the condition that should be made in the labor market and the macro would deals with the overall GDP also how the unemployment level, inflation level and the price level impact it
Therefore the first option is correct
The following information is available from the current period financial statements: Net income $150,000 Depreciation expense 28,000 Increase in accounts receivable 16,000 Decrease in accounts payable 21,000 The net cash flow from operating activities using the indirect method is Group of answer choices $141,000 $173,000 $117,000 $215,000
Answer:
$141,000
Explanation:
Given the above information, the net cash flow is computed as shown below
= Net income + Depreciation expense - Increase in accounts receivables - Decrease in accounts payable
= $150,000 + $28,000 - $16,000 - $21,000
= $141,000
Therefore, the net cash flow from operating activities using the indirect method is $141,000
Which of the following conditions is characteristic of a monopolistically competitive firm in both the short-run and the long run?
a. P> MC
b. MC = ATC
c. P < MR
d. All of the above are correct.
Answer:
b or d
Explanation:
probably b but I am not sure tho sorry
The characteristic of a monopolistically competitive firm in both the short-run and the long run is P>MC.
The following information should be considered:
Monopolistically competitive firm has downward sloping demand curve and marginal revenue curve for monopolistically competitive firm should be below the demand curve. The firm maximizes it's profit where MR equivalent MC And charge price on the demand curve above in the case when MR equals MC. Therefore price >MR =MC.Learn more: brainly.com/question/17429689
Read the following paragraph and respond to the questions below.
(1) Frequently, department managers and supervisors recruit applicants without working through our corporate human-resources office. (2) Our human-resources departments at all of our locations across the country have experienced this problem. (3) Recently, the manager of our tool-design department met with a recent industrial design graduate to discuss an opening for a tool designer. (4) The graduate was sent to the human-resources department, where she was told that no such position existed. (5) When the tool-design manager asked the director of human resources about the matter, the manager learned that the company president had ordered a hiring freeze for two months. (6) I’m sure that our general employment situation will get better. (7) As a result of the manager’s failure to work through proper channels, the applicant was not only disappointed but bitter.
a. Which number sentence is the topic sentence?
b. Which number sentence does not contribute to paragraph unity?
c. What is the writer providing in sentences 3 through 7 to help the reader understand his/her point?
d. Why is that helpful, or why is the message better by adding sentences 3 through 7?
Answer:
a. The number sentence that is the topic sentence is sentence (1).
b. Sentence (6) does not contribute to the paragraph's unity. It can be eliminated, without changing the meaning that can be obtained from the paragraph. It does not support the topic.
c. The writer, in sentences 3 through 7, provides an example and further details to help the reader to understand her point.
d. The example in a sentence makes the idea clearer to the reader. Without the example, which provides further details, the reader may not clearly appreciate the topic under discussion.
Explanation:
The purpose of the topic sentence is to introduce the theme of the paragraph or the point of view of the writer. It captures the essence of the story. As it bears the central idea, it focuses the paragraph to achieve unity.
write short notes on united nations with its diffrent functions
Answer:
can u explain more i ididnt understand
Explanation:
Open communication occurs best when:
a. people feel their opinions are valued.
b. people feel they will be rewarded, or at least not punished, for their opinions.
c. both a and b
d. neither a nor b
Which of the following is true of hierarchical clustering?
a. The data partition does not occur in a single step
b. All clusters must have the same number of data
c. All clusters must have more than one object in it
d. No single cluster can have all data
Answer:
The data partition does not occur in a single step
Explanation:
A product sells for $30 per unit and has variable costs of $18 per unit. The fixed costs are $720,000. If the variable costs per unit were to decrease to $15 per unit, fixed costs increase to $900,000, and the selling price does not change, break-even point in units would:
Answer:
remain the same
Explanation:
Breakeven quantity are the number of units produced and sold at which net income is zero
Breakeven quantity = fixed cost / price – variable cost per unit
Initial Breakeven quantity = $720,000 / ($30 - $18) = 60,000
New Breakeven quantity = $900,000 / ($30 - $15) = 60,000
Breakeven point remained the same
The US Federal System is the voting method for passing a bill into law. It involves 100 members of the Senate, 435 members of the House of Representatives, the vice president, and the president, for a total of 537 voters. For a bill to pass, it must have a majority in the House, a majority in the Senate, with the possibility of the vice president breaking a tie, and the signature of the President; or if the president opposes the bill, it must have a 2/3 super-majority in both the House and Senate to override the veto. Otherwise the bill is defeated. Think of this as a social choice function where the alternatives are A, to pass the bill, or B, to defeat the bill. Does the US federal system satisfy:
a. the anonymity criterion
b. the neutrality criterion
c. the monotonicity criterion
d. the decisiveness criterion
Answer:
correct answer is B nun else
If nominal GDP is $1,200 billion and, on average, each dollar is spent five times in the economy over a year, then the quantity of money demanded for transactions purposes will be?
Choices
1,200
6,000
600
240
960
Out of the choices provided above, it can be concluded to state that the quantity of money demanded for transactions will be $6,000 if the conditions given above with respect to the nominal GDP are satisfied in an economic situation. Therefore, the option B holds true.
What is the significance of nominal GDP?The nominal GDP of an economy can be referred to or considered as the unit of measurement that is used to represent the final value of finished goods and services, where no adjustments for the prevailing inflation rates are taken into consideration.
The quantity of money demanded can be computed using the given nominal GDP's information as under,
Quantity of Money Demanded = Nominal GDP x Dollar Spending
Quantity of Money Demanded = 1200 × 5
Quantity of Money Demanded = $6,000
Therefore, the option B holds true and states regarding the significance of nominal GDP.
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Capital budgeting analysis not only requires the evaluation of cash flows but also requires the understanding of the origin of those cash flows. Based on your understanding of cash flows in a firm, complete and answer the following questions The present value of ___________ can be used to determine the basis of a firm's value. Ideally, capital budgeting analysis should take cash flows into account ___________
Understanding the nature of projects
Capital budgeting analysis often involves decisions related to expansion projects and/or replacement projects. Based on your understanding of expansion and replacement projects, complete the following:
If a clothing store opens a second retal location on the other side of town, this project would be considered__________ project.
What are sunk costs?
Acme Manufacturing owns a warehouse that it is not currently using. It could sell the warehouse for $300,000 or use the warehouse in a new project. Should Acme Manufacturing include the value of the warehouse as part of the in investment in the new project or treat the value of the warehouse as a sunk cost?
Yes, include the value of the warehouse as part of the initial investment in the new project
No, treat the value of the warehouse as a sunk cost
The role of externalities
A paper manufacturer has built a plant that meets all government-mandated environmental regulations, but the pl sant odor when it is being operated. Many residents in the area dislike the paper mill because of these unpleasant odors. This is an example of ________externality.
Answer:
Present Value of Cash Flows
Exactly when they occur
Expansion Project
Sunk cost is the cost which is already incurred and it is not affected by the decision to accept or reject the project.
Include the value of the warehouse as part of the initial investment in the new project.
Negative Externality
Explanation:
Present value of Cash flows is the discounted cash flows which shows the real worth of the money now which is to be received in future. Sunk costs are not part of the project as they are already incurred. These cost are not included in the calculations of the project cash flows. Negative externality is the undesirable impact due to production and manufacturing plants operations on the environment.
BR Company has a contribution margin of 18%. Sales are $423,000, net operating income is $76,140, and average operating assets are $131,000. What is the company's return on investment (ROI)
Answer:
58.12%
Explanation:
Return on investment = Net operating income / Average operating assets
Return on investment = $76,140 / $131,000
Return on investment = 0.5812214
Return on investment = 58.12%
So, the company's return on investment (ROI) is 58.12%.
Tumbling Haven, a gymnastic equipment manufacturer, provided the following information to its accountant. The company had net fixed assets of $25 million, and other non-current assets of $2 million. The firm has current liabilities of $2 million, long-term debt of $10 million, common stock of $3 million, and retained earnings of $25 million. What amount of current assets did this firm have
Answer:
See below
Explanation:
Given the information above,
Total asset = Current asset + Net fixed assets + Other non current assets
= Current asset + $25m + $2m
= Current asset + $27m
= Long term debt + equity
= 10m + $3m + $25m
= $38m
Current liabilities = $2m
Since current liabilities = Total asset - (long-term debt + equity)
$2m = (current asset + $27m) - $38m
$2m = current asset + $27m - $38m
Current asset = $2m - $27m + $38m
Current asset = $13m
Which of the three types of business is the shoe store?
Answer:
I think a shoe store would be considered a corporation, however it could be a sole proprietorship meaning the business is solely owned and taken care of by one person, but that's unlikely since a shoe store would need employees to maintain their store.
Explanation:
There are three categories of business which are the following:(1) sole proprietorship, (2) partnership, and (3) corporation. Within each category, there are several variations.
Hope I helped, have a nice day :)
In 2019, Perry, who is not otherwise involved in the gas station business, spends $53,000 investigating the acquisition of a gas station. All costs are ordinary and necessary. Perry decides not to acquire the gas station. What amount can Perry deduct in 2019 for the expenses incurred in investigating the acquisition of the gas station if Perry makes an election to accelerate his deductions as much as possible
Answer:
Perry and Investigation Expenses:
Perry can deduct the full $53,000.
He can also elect to capitalize the amount, assuming that he is acquiring the gas station, because, according to IRS, "general due-diligence and investigatory expenses incurred to decide whether to enter a new business, and which new business to enter, can be deducted/amortized under Sec. 195."
Explanation:
Facts as per scenario:
Perry is not involved in the gas station business.
Perry spends $53,000 investigating the acquisition of a gas station.
All costs are ordinary and necessary.
Perry does not acquire the gas station.
In 2016, David Hay started his own business, Hays Gardening and Landscapes. David was previously an employer of another business/
a) What was the opportunity costs for David when he started his business?
A. Cost of marketing to attract customers.
B. Loss of earnings from employment
C. Payment of taxes on profits
D. Risk of business failure
ANSWER:
b) Explain why this answer is correct?
Answer:
B. Loss of earnings from employment
Explanation:
David's opportunity cost in this scenario would be the loss of earnings from employment. This is because is no longer employed, meaning that he no longer makes money from his employment due to him "choosing" to quit and start his own business. Therefore, that is the cost of him choosing another opportunity. The financial costs of marketing, taxes, and risk of business failure are all costs he may or may not incur from the chosen opportunity but are not the same as "opportunity costs" since they are costs that need to be met in order to continue this opportunity and not something that was given up in order to choose this opportunity.
Vertical analysis can best be described as a technique for analyzing the percentage change in individual financial statement line items from one accounting period to the next.
a. True
b. False
Answer:
False
Explanation:
Vertical analysis can be regarded as accounting tool which gives room for
proportional analysis of some documents. This document is usually
financial statements.In carrying out vertical analysis, all the item line that is on the financial statement is been recorded as percentage of another item. Instance of this is an income statement.
An elevator company has redesigned their product to be 50% more energy efficient than hydraulic designs. Two designs are being considered for implementation in a new building.
(a) Given an interest rate of 20% which bid should be accepted?
Alternatives
Installed cost
Annual cost
Salvage value
Life, in years
A
$45,000
2700
3000
10
B
$54,000
2850
4500
15
(b) Research and list a few attributes that the company might be using in the elevators' major systems drive, cab, hoist, and control mechanisms that make them more energy efficient.
Answer:
An Elevator Company
a) Given an interest rate of 20%, bid A should be accepted.
b) Attributes that make the Elevators More Energy Efficient:
1. software- and microprocessor-based controls without using electromechanical relays
2. in-cab sensors and software to automatically turn off lights, ventilation, and other facilities when not in use.
3. destination dispatch control software to batch elevator stops.
4. Using dispatch controls that rely on personalized calls instead of in-cab controls.
Explanation:
a) Data and Calculations:
Interest rate = 20%
Alternatives A B
Installed cost $45,000 $54,000
Annual cost 2,700 2,850
Salvage value 3,000 4,500
Life, in years 10 years 15 years
Present value
annuity factor 4.192 4.675
Discount factor 0.162 0.065
Present values:
Installed cost $45,000 $54,000
Annual cost 11,318 13,324
Salvage value (486) (293)
Net present cost $55,832 $67,031
Magna Lighting Inc. produces and sells lighting fixtures. An entry light has a total cost of $125 per unit, of which $80 is product cost and $45 is selling and administrative expenses. In addition, the total cost of $125 is made up of $90 variable cost and $35 fixed cost. The desired profit is $55 per unit. Determine the markup percentage on product cost.
Answer:
The correct solution is "125%".
Explanation:
Given:
Desired profit,
= $55
Selling and administrative expenses,
= $45
Product cost,
= $80
Now,
The markup percentage will be:
= [tex]\frac{Desired \ profit+Selling \ and \ administrative \ expenses}{Product \ cost}\times 100[/tex]
By putting the values, we get
= [tex]\frac{55+45}{80}\times 100[/tex]
= [tex]\frac{100}{80}\times 100[/tex]
= [tex]125[/tex] (%)
125% is the markup percentage on product cost.
MarkupIt is important to remember that markup is a term used to refer to the difference between the selling price of a product and cost.
SolutionUsing the formula
Desired profit + Selling and administrative expenses/product cost X 100
Desired profit = $55Selling and administrative expenses = $45product cost = $8055+45/80 = 1.25
1.25* 100= 125
= 125%
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Companies must disclose when they give products to online reviewers.
Question 15 options:
True
False
Answer:
True
Explanation:
In simple terms, whenever an individual works with brands to recommend or endorse a product you must disclose the partnership. You have to declare your relationship to the brand even if you are not being compensated.
If capital rents for $25 per unit per hour, labor can be hired for $9 per unit per hour, the level of total factor productivity is normalized to 1, and the firm is minimizing costs.(a) Determine whether the production function exhibits diminishing marginal returns to each input.
Answer:
Following are the solution to the given question:
Explanation:
The decrease of a marginal input return implies that its input is increasing by one unit, thereby decreasing its marginal input product.
Function of production
[tex]F(K, L) = AK^{\frac{3}{4}} L^{\frac{3}{4}}[/tex]
Its capital products subject (MPK) is derived by differentiating the factor of production from K.
[tex]MPK = \frac{3}{4}\times AK^{\frac{3}{4}} - 1L^{\frac{3}{4}}\\\\MPK = \frac{3}{4}AK^{-\frac{1}{4}}L^{\frac{3}{4}}\\\\MPK = \frac{3}{4}\times A\times (\frac{L^{\frac{3}{4}}}{K^{\frac{1}{4}}})[/tex]
Note: When a value is changed from numerator to denominator, then the power symbol shifts between positive to negative.
Since k is in the denominator, K decreases [tex]\frac{3}{4}\times A\times (\frac{L^{\frac{3}{4}}}{K^{\frac{1}{4}}})[/tex], and therefore MPK is reduced.
There's hence a decreased effective return on capital again for production function.
Its marginal labor product (MPL) is determined by distinguishing the manufacturing function from L.
[tex]MPL = (\frac{3}{4})\times AK^{\frac{3}{4}}L^{\frac{3}{4}}-1\\\\MPL = (\frac{3}{4})AK^{\frac{3}{4}}L^{-\frac{1}{4}}\\\\MPL = (\frac{3}{4})\times A\times (\frac{K^{\frac{3}{4}}}{L^{\frac{3}{4}}})[/tex]
The denominator of L reduces L [tex](\frac{3}{4})\times A\times (\frac{K^{\frac{3}{4}}}{L^{\frac{3}{4}}})[/tex] and therefore reduces MPL.
So there is a decreasing marginal return to labor in the production function.
Suppose the stock of Host Hotels & Resorts is currently trading for per share. a. If Host issued a stock dividend, what would its new share price be? b. If Host does a 3:2 stock split, what would its new share price be?
Answer:
A. $16.67 per share
B. $13.33 per share
C. $60.00 per share
Explanation:
a. Calculation to determine what will its new share price be If Host issued a 20% stock dividend
Using this formula
New share price (stock dividend) = Old price / (1 + Stock dividend rate)
Let plug in the formula
New share price (stock dividend) =$20/(1+0.20)
New share price (stock dividend) =$20/1.20
New share price(stock dividend) =$16.67 per share
Therefore If Host issued a stock dividend, its new share price will be $16.67 per share
b. Calculation to determine what will its new share price be If Host does a 3:2 stock split
Using this formula
New share price=Old price/Stock split
Let plug in the formula
New share price=$20/(3/2)
New share price=$20/1.5
New share price= $13.33 per share
Therefore If Host does a 3:2 stock split its new share price will be $13.33 per share
c. Calculation to determine what will its new share price be If Host does a 1:3 reverse split
Using this formula
New share price=Old price/Reverse split
Let plug in the formula
New share price=$20/(1/3)
New share price=$20/0.33333
New share price= $60.00 per share
Therefore If Host does a 1:3 reverse split its new share price will be $60.00 per share
The income statement of Martinez Company is shown below. MARTINEZ COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020
Sales revenue $6,380,000
Cost of goods sold
Beginning inventory $2,080,000
Purchases 4,350,000
Goods available for sale 6,430,000
Ending inventory 1,460,000
Cost of goods sold 4,970,000
Gross profit 1,410,000
Operating expenses
Selling expenses 430,000
Administrative expenses 670,000 1,100,000
Net income $310,000
Additional information:
1. Accounts receivable decreased $300,000 during the year.
2. Prepaid expenses increased $150,000 during the year.
3. Accounts payable to suppliers of merchandise decreased $280,000 during the year.
4. Accrued expenses payable decreased $110,000 during the year.
5. Administrative expenses include depreciation expense of $70,000.
Required:
Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2020, for Vince Gill Company, using the indirect method.
Answer:
Cash flow from operating activities
Net income $310,000
Adjustment to reconcile net income to
net cash provided by operating activities
Depreciation expense $70,000
Decrease in account receivable $300,000
Decrease in inventory $620,000
Increase prepaid expense -$150,000
Decrease account payable -$280,000
Decrease accured expense payable -$110,000 $450,000
Net cash outflow from operating activities $760,000
How dose the very small businesses finance
Answer:
Small Business Administration offers lenders, mostly traditional banks, a federal guarantee on your loan
While the evidence suggests that over long periods of time that stocks will outperform bonds, individuals with a long-term investment horizon may still choose to invest in bonds. Is this rational behavior? Why or why not?
Answer:
Stocks and Bonds
Yes. It is a rational behavior for individuals with a long-term investment horizon to choose to invest in bonds rather than investing in stocks despite the overwhelming "evidence that suggests that over long periods of time stocks still outperform bonds."
Rational behavior involves making rational choices that provide optimal levels of benefit or utility for the individual. People who make rational choices would rather choose bonds with lower risks and returns than stocks with higher risks and returns.
Explanation:
Every rational investor would prefer to reduce her risk exposure instead of increasing it. Every investor is also aware that investments with higher risks attract higher returns. However, determining the certainty of the returns is difficult.
The Quorum Company has a prospective 6-year project that requires initial fixed assets costing $962,000, annual fixed costs of $403,400, variable costs per unit of $123.60, a sales price per unit of $249, a discount rate of 14 percent, and a tax rate of 21 percent. What is the present value break-even point in units per year
Answer:
5375
Explanation:
Given that:
Initial Fixed assets costing = $962000
Annual fixed costs = $403400
Variable cost per unit = $123.60
Sales price per unit = $249.00
Discount rate = 14%
Tax rate = 21%
The contribution per unit = Sales price - Variable cost
= $(249.00 - 123.60)
= $125.40
The present value break-even point(BEP) is the region of sales level where the net present value (NPV) equals zero.
Assuming that the sales level = p
i.e.
NPV = PV(of inflows - of outflows)
Inflows = (p * contribution per unit - annual fixed cost)( 1- tax rate) + depreciation * tax rate
= (p * 125.4 - 403400) ( 1 - 0.21) + depreciation * tax rate
where;
depreciation = initial fixed assest cost/ lifetime of the project
= (125.4p - 403400)*0.79 + (962000/6)*0.21
= (125.4p - 403400)*0.79 + (160333.33)*0.21
= (125.4p - 403400)*0.79 + 33670
Now, the PV of the inflows =PV factor(6 years, 14%) * inflows
[tex]= inflows * \dfrac{( 1-(1.14)^{-6})}{0.14}[/tex]
[tex]= inflows * 3.8887[/tex]
Replacing the value for inflows, we have:
[tex]=((125.4p - 403400)*0.79 + 33670)* 3.8887[/tex]
The PV of the outflows = Initial Fixed asset cost = $962000
∴
Equating both together using:
PV(of inflows - of outflows) = 0
((125.4p - 403400)*0.79 + 33670)* 3.8887 - 962000 = 0
((125.4p - 403400)*0.79 + 33670)* 3.8887 = 962000
(99.066p - 318686 + 33670) * 3.8887 = 962000
(99.066p - 285016) * 3.8887 = 962000
385.24p - 1108341.72 = 962000
385.24p= 962000 + 1108341.72
385.24p= 2070341.72
p = 2070341.72 / 385.24
p ≅ 5375
